High Court Blocks KRA from Imposing VAT on Golf and Sports Club Fees
By Charity Chebusiri
The High Court has ruled in favor of golf and sports clubs, blocking the Kenya Revenue Authority (KRA) from imposing a 16 percent Value Added Tax (VAT) on annual subscription and entrance fees.
Justice Nixon Sifuna dismissed KRA’s appeal to overturn a previous decision that prohibited the tax authority from demanding VAT payments from the clubs. The ruling is a significant victory for the Sigona Golf Club, Thika Sports Club, Kiambu Golf Club, Ruiru Golf Club, and the Kenya Golf Club Federation, which had contested the KRA’s attempt to collect VAT for the years 2015 and 2016.
In his judgment, Justice Sifuna stated, “Taxes are an inevitable and legitimate source of government revenue, but the KRA cannot tax anything and everything. There must exist a legal and rational basis for each tax stream.” He emphasized that while taxes are crucial for the economy, the application of VAT to club fees lacked a legal foundation.
The KRA had sought to recover over Ksh 40 million from the clubs, arguing that the VAT should be applied to the fees as part of its revenue collection efforts. However, the clubs contended that their activities are primarily recreational rather than commercial, and thus should be exempt from VAT.
Justice Sifuna upheld the view that while clubs operate as businesses, the services provided through memberships and entrance fees are aimed at fulfilling personal hobbies rather than generating profit. He asserted that the court’s role is to ensure fair and legal tax practices and to prevent excessive demands that could be viewed as “greedy.”
This ruling reinforces the legal boundaries of tax imposition and supports the argument that not all organizational activities are subject to VAT.
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