Stockbrokers now seek review of capital gains tax judgement
What you need to know:
- There is an error on the face of the record, which warrants a review of the judgment,” Kenya Association of Stockbrokers and Investment Bankers (Kasib) lawyer yesterday told Mr Justice Weldon Korir.
Stockbrokers have gone back to court challenging a recent judgement by Judge Mumbi Ngugi that dismissed their application to stop the government from reintroducing capital gains tax.
The brokers said Judge Mumbi Ngugi relied on a provision of the Income Tax Act, which was repealed through section 26 of the Finance Act, 2006.
“Judge Ngugi mistakably relied on a provision that is no longer part of the law when she dismissed our arguments based on the provisions of section 35(3A) and (3B) of the Income Tax Act.
There is an error on the face of the record, which warrants a review of the judgment,” Kenya Association of Stockbrokers and Investment Bankers (Kasib) lawyer yesterday told Mr Justice Weldon Korir.
In their initial application, the stockbrokers had opposed the re-introduction of capital gains tax by the government, saying that it has created confusion in the money market.
ABILITY TO COMPLETE
They said the law requires stockbrokers to act as tax agents with respect to the tax, noting that its imposition stands to greatly harm the Nairobi Securities Exchange and stockbrokers’ ability to compete for investment and growth in the modern financial market.
Thursday, they brought the court’s attention to the fact that after the delivery of the judgment on March 20, Judge Ngugi made an order directing that the status quo be maintained for a period of 21 days, which lapsed on April 10.
The application has been certified urgent.
Kasib’s fear is that the Kenya Revenue Authority officials are likely to take enforcement action against its members before their application is heard and determined.
In addition, the brokers noted that members are at risk of arbitrary criminal prosecution for failure to collect and remit capital gains tax for transactions they conduct on behalf of their clients, as provided by the law.
FILE RESPONSES
Section 35(5) of the Income Tax Act provides for the remission of taxes deducted under that section to the KRA on or before the 20th of the month following the month of the deductions.
Judge Korir, however, directed the taxman and the Attorney-General to file their responses within seven days.
The case will be heard on May 4, before Judge Ngugi.
