By Elvis Lagat 

The Kenya Revenue Authority (KRA) is poised to collect KSh 384 million in taxes from NCBA Bank following a landmark ruling by the High Court. The ruling annuls a previous tax exemption granted to the bank after its merger with Commercial Bank of Africa (CBA) and NIC Group PLC to form NCBA.

In a judgment delivered by Justice Chacha Mwita, the court declared that Legal Notice Number 112, issued by former Treasury Cabinet Secretary Henry Rotich on June 26, 2019, which had granted the tax exemption, was invalid. The exemption had allowed the bank to avoid paying KSh 384.5 million in taxes as a result of the merger.

Justice Mwita stated that the exemption violated Section 106(1) of the Stamp Duty Act, and was not in the public interest. “After reviewing the submissions and arguments, I find that the exemption was not in the public interest, thereby breaching Section 106(1) of the Stamp Duty Act. The request for the exemption was more aligned with private interests rather than the public good, thus contravening Article 21 of the Constitution,” the judge remarked.

The court's ruling comes after the KRA sought to join the case in 2023 to challenge interim orders that had prevented the tax authority from collecting taxes from NCBA. The Treasury had earlier concluded that there was no clear public interest to justify the exemption, particularly concerning the KSh 1.35 billion Capital Gains Tax (CGT) that had been granted to NCBA.

Following this conclusion, the Cabinet Secretary for the Treasury rescinded the exemption, prompting KRA to move forward with collecting the taxes owed by NCBA. The annulment of the exemption represents a significant victory for the KRA in ensuring that all tax obligations are met in accordance with the law.

As a result of the court's decision, NCBA is now required to pay the KSh 384 million in taxes that had been previously exempted. The ruling reinforces the principle that tax exemptions should serve the public interest and not be granted on grounds that primarily benefit private entities.

April 07, 2025