Insurance brokers sue Kenya’s Attorney General, KRA over 10pc excise tax

NAIROBI: Insurance brokers have contested the introduction of 10 per cent levy on their brokerage commission. Eighteen insurance brokerage firms have moved to court under a certificate of urgency, suing Commissioner of Domestic Taxes and the Attorney General.

The firms complain that introduction of 10 per cent levy on their commissions is against the constitution and oppressive. They are seeking to stop Kenya Revenue Authority (KRA) from demanding the levy from them.

"It is impossible for the applicants as insurance brokers to load 10 per cent excise tax on the commission they receive for the services they offer and still be able to compete effectively with insurance companies who most of the time receive insurance business from the public,'' the petition filed by the lawyer of the insurance brokerage companies Jotham Arwa reads.

DOUBLE TAXATION

Mr Arwa in the papers filed before the court argued that introduction of the new law is a multiplication of taxes collected from the consumers of insurance services. "The implementation of the amendments in the customs and excise law will amount to double taxation for the applicants as insurance brokers. It is not possible for them to pass the burden of tax to the consumers and thus they will have to shoulder it,'' he said.

The new excise law, according to Arwa has squared insurance brokers only, leaving others who deal with real estate. He cited discrimination, saying that all of the players ought to be equal before the law.

He added that the contested law heavily affected the rights of the insurance brokers though they were not consulted when it was being amended before the floor of the house.

"The said amendments cannot be implemented without violating the rights of the applicants as insurance brokers and the insuring public hence the implementation amounts to an outright contravention of the constitution,'' said Arwa. The lawyer raised fears that the tax man would be on his clients' necks demanding the excise duty, noting that there would be loss of business once the Caesar decides to recover the monies.