Kenya court rejects early tax challenge, leaving Finance Act measures in place

Kenya’s consumer federation went to court to stop a package of tax measures before it became law. That timing proved decisive: the High Court in Nairobi struck out its petition because the legislation was still before Parliament when the case began. The ruling leaves the National Treasury’s measures under the Finance Act 2026 available for implementation, according to Nation Africa Kenya (direct), without settling whether those measures are constitutional.

Justice David Mburu ruled that the Consumers Federation of Kenya, known as Cofek, had brought its case too early. Cofek filed the public-interest petition on June 15, 2026, seeking to have several provisions declared unconstitutional and to block their enactment and implementation. The Bill became the Finance Act on June 23, before the court decided the petition. But that change did not rescue the original case.

A tax dispute stopped at the procedural gate

The challenged provisions covered several parts of the economy. They included withholding tax on scrap-metal transactions—a tax collected at the point of payment—reporting requirements for virtual assets, and broader enforcement powers for the Kenya Revenue Authority, or KRA. Cofek also challenged the removal of VAT zero-rating, which applies a zero rate of value-added tax, and raised issues involving Kenya’s obligations under the East African Community treaty.

The federation argued that the measures raised concerns about consumer protection, privacy and fair administrative action. It said the Constitution permits courts to intervene when rights are threatened, rather than requiring people to wait for an actual violation. Its submissions also addressed digital-payment taxation and called for impact assessments and safeguards on several proposed tax measures.

KRA, the Attorney-General and the National Assembly opposed the petition. Their central argument was that a Bill still moving through Parliament has no force of law and can be changed, dropped or rejected. The judge agreed that there was no dispute ready for a decision. He applied the doctrine of ripeness: the requirement that a legal dispute must have developed far enough for a court to grant relief.

Mburu also found that hearing the challenge at that stage would intrude on Parliament’s law-making role. He said Cofek could have petitioned Parliament under Article 119(1) of the Constitution while the legislative process continued. The federation retained the right to challenge the legislation once it became law, but that required a case directed at the enacted measure.

The Act remains open to a fresh challenge

Cofek had asked for its petition to carry over automatically to corresponding provisions of the Finance Act after enactment. The judge rejected that approach, treating the Bill and the Act as legally separate instruments. The court filings challenged only the Bill. A request for relief, he reasoned, could not create a claim against legislation that did not yet exist when the petition was filed.

The distinction limits the reach of the ruling. The court did not determine whether the Finance Act’s provisions complied with the Constitution; it decided that this petition was not the vehicle for testing them.

Justice Mburu said the ruling made no decision on the merits of a constitutional challenge to the enacted law.

The Finance Act was published in the Kenya Gazette on June 26 and took effect mainly on July 1, 2026, with some provisions starting later. The next point to watch is whether a challenge is filed specifically against the Act. Any such case would need pleadings aimed at the law now in force, rather than the proposal Parliament was still considering when Cofek first sued.