Kenyan appeals court declares Finance Act 2023 void, backs High Court judgment

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August 1, 2024
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2 min read
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The news: 

  • An appeals court sitting in Nairobi, Kenya, has declared the Finance Act, 2023, unconstitutional, citing fundamental flaws in its enactment process. 
  • The appeals case was based on the constitutional legitimacy of the Act, enacted amidst legal challenges and public resistance.
  • The three-judge bench led by Judge Kathurima M'Inoti, with Judges Agnes Kalekye Murgo and John Mativo, in a judgment delivered on Wednesday, July 31, 2024, found that the Finance Act, 2023 enactment violated multiple constitutional provisions.

According to the court, the process violated Articles 220(1)(a) and 221 of the Constitution, and sections 37, 39A, and 40 of the Public Finance Management Act (PFMA), which clearly outlines the budget-making process.

Consequently, the panel of judges concluded that failure to comply with these constitutional and statutory requirements rendered the whole Act unconstitutional and void from the beginning.

The Finance Bill, 2023, published on April 28, 2023, quickly advanced through the legislative process, where it passed the National Assembly and received presidential assent by June 2023. 

The Act brought several amendments to 12 existing laws, including major revisions to the Income Tax Act, the Value Added Tax Act, and the Employment Act, among others. 

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The enactment of Kenya's Finance Act 2023 faced legal challenges, with 11 constitutional petitions filed in the High Court. These petitions were soon consolidated. 

In June 2023, the High Court indefinitely suspended the Act, citing challenges to both the legislative process and specific provisions of the law. 

But the appellant appealed the decision, aiming to overturn the High Court’s ruling. The state contended that the High Court made an error, asserting that the Finance Act 2023 was enacted under all relevant constitutional provisions. 

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However, the Court of Appeal upheld the High Court’s decision, declaring that various sections of the Finance Act No. 4 of 2023, which amended multiple laws including the Income Tax Act, VAT Act, Excise Duty Act, and others, were unconstitutional. 

It also ruled these sections void due to a lack of fresh public participation and violations of constitutional legislative procedures.

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