Court suspends 25 per cent excise duty on imported furniture

Traditional lounge/living room with sofa, with curtains, and table [Courtesy]

The High Court has suspended a new tax increase on imported furniture until a case filed by an activist is heard and determined.

Justice Anthony Mrima on Monday stopped the Treasury and the Kenya Revenue Authority (KRA) from imposing 25 per cent excise duty on imported furniture.

“This is a unique case that can brew conflict with Kenya’s trading partners within the East African Community and in the premise, the court is satisfied to issue an order suspending imposition of the 25 per cent excise duty on imported furniture as proposed in the Finance Act, 2021,” ruled Mrima.

The suit challenging the new tax for imported furniture was filed by activist Okiya Omtatah who argued that it was illegal and unfair to traders engaged in the business.

According to Omtatah, the decision to increase tax on imported furniture was sneaked in by members of the National Assembly without approval by the departmental committee of Finance and National Planning.

He argued that the proposal had been shared during the committee’s meeting who engaged the public to get their views, but it was rejected on account that it was unfair to importers of furniture.

Omtatah told the court the departmental committee presented the Finance Bill to the National Assembly with an observation that proposal to increase tax for imported furniture be deleted, but that the MPs illegally reintroduced the provision and passed it.

He argued that the move was unconstitutional and went against the public and the Treasury’s proposals that the provisions be expunged from the Finance Act.

Justice Mrima noted that he could not ignore reasons given by the National Treasury when it advised the departmental committee of Finance and National Planning to expunge the provision on account that imported furniture was already heavily taxed.

According to the ministry, imported furniture already attracts import duty of 35 per cent and 16 per cent VAT to protect local furniture producers and the additional tax would be unfair to other trading partners within the East Africa Community.

Mrima added it was only fair that the new tax be suspended until all the issues were interrogated.

The judge added the Treasury, while opposing imposition of thee new excise duty, was satisfied that it had other areas of widening the tax bracket to support the national budget, which meant it was not necessary for Parliament to reintroduce it.

He ruled that since the Finance Act of 2021/2022 had just come into force, there will be no harm caused if the 25 per cent excise duty on imported furniture was suspended until the case is determined.