On 20 February 2020, the High Court of Kenya rendered a judgment affirming that sections 57, 58(2), 59, and 99 of the Tax Procedures Act, 2015 (TPA) are consistent with the Constitution of Kenya, 2010.
The decision was issued in Okiya Omtatah Okoiti v Attorney General & Kenya Revenue Authority, Petition No. 156 of 2017. The petitioner, Okiya Omtatah Okoiti, had challenged the constitutionality of the said provisions, arguing that they infringed the right to privacy under Article 31 and the privilege against self-incrimination guaranteed under Article 50(2)(l) of the Constitution.
Statutory Background
The impugned sections of the TPA confer investigative and enforcement powers upon the Kenya Revenue Authority (KRA). These powers include:
- Accessing premises to inspect goods, records, and equipment;
- Requiring persons in possession of relevant documents to produce them;
- Extracting or copying information for tax purposes; and
- Seizing documents necessary for determining a taxpayer’s liability.
In practice, the KRA invokes these provisions to obtain information from third parties such as banks and debtors of taxpayers, to verify compliance and collect outstanding taxes. The TPA further provides that:
- Any document or statement obtained may be admissible in civil or criminal proceedings involving the taxpayer; and
- Failure to comply with information requests attracts a penalty not exceeding KES 1,000,000, imprisonment for a term not exceeding three years, or both.
The Petitioner’s Argument
Mr. Omtatah argued that the provisions unlawfully limit individuals’ constitutional rights to privacy and protection against self-incrimination. He also alleged that KRA’s exercise of these powers had been politically motivated in certain cases — citing, for example, a 2017 request by KRA to Diamond Trust Bank for financial records relating to Governor Ali Hassan Joho.
The Court’s Determination
The Court dismissed the petition, finding that:
- KRA’s enforcement powers are legitimate and necessary for ensuring tax compliance under the law.
- These powers do not unreasonably infringe privacy rights, as they relate specifically to determining tax liability rather than personal or private affairs.
- Under section 6 of the TPA, KRA is under a legal duty to maintain confidentiality of taxpayer information, save for exceptions permitted under section 6(2).
On the question of self-incrimination, the Court held that the privilege does not shield individuals from fulfilling lawful obligations under tax law. It emphasized that the right cannot be used as a cover for evading taxes or obstructing the lawful mandate of the KRA. Accordingly, obtaining records or statements for enforcement purposes does not amount to a violation of Article 50(2)(l).
Context and Legal Implications
This decision follows an earlier judgment in Robert K. Ayisi v Kenya Revenue Authority, Petition No. 421 of 2016, where the High Court had declared section 59(4) of the TPA unconstitutional for breaching advocate–client privilege under section 137 of the Evidence Act (Cap 80).
The 2020 judgment therefore clarifies that, save for section 59(4), the KRA retains broad statutory authority to compel production of information from various persons to establish tax liability.
Commentary
The ruling reinforces KRA’s investigative and enforcement mandate at a time when the Authority is intensifying tax compliance efforts. However, concerns persist regarding the potential misuse of these powers for politically motivated investigations. The Court did not fully address safeguards against such abuse, leaving room for future litigation or legislative clarification on the limits and accountability mechanisms governing KRA’s enforcement actions.
