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Kenya: The High Court reviews its earlier judgment and rules that the VAT Regulations, 2017 are valid and have force of law

26 July 2022
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In a Ruling delivered by the High Court on 14th July 2022 in the case of Commissioner of Domestic Taxes vs W.E.C Lines Kenya (HCCOMMITA/E084/2020) (the Ruling) (being an application for review by the Kenya Revenue Authority (KRA) against the earlier judgment of the High Court dated 22 January 2022 (the Judgment)), the Court determined the question of whether the VAT Regulations, 2017 (the VAT Regulations), (Legal Notice No. 54 of 2017) are valid and have force of law. 

The matter stemmed from value added tax (VAT) refund applications made by W.E.C Lines Kenya (W.E.C Lines) to the KRA on the basis of exportation of services, which therefore constituted zero-rated supplies. In rejecting the applications, KRA relied on among other provisions, regulation 13 of the VAT Regulations to conclude that the supplies of W.E.C Lines did not qualify as exported services and were consequently subject to VAT at the rate of 16%. W.E.C Lines appealed to the Tax Appeals Tribunal (the Tribunal) on among other grounds, that the KRA erred by giving prime consideration to the provisions of the VAT regulations, a subsidiary law, over the provisions of the VAT Act, being the primary Act.

The Tribunal allowed W.E.C Lines’ appeal and held that the Appellant was entitled to the VAT refunds (subject to KRA’s review). KRA appealed the Tribunal’s decision to the High Court. KRA and W.E.C Lines agreed that the VAT Regulations were not tabled before the National Assembly as required under the Statutory Instruments Act, 2013. As a result, the High Court held that the regulations were invalid as they were issued contrary to the procedural requirements.

Subsequently, KRA applied for review of the High Court’s judgment on the basis that, indeed, the VAT Regulations had been tabled before and approved by the National Assembly, contrary to the position erroneously relied on in the Judgment of the High Court. In reviewing its judgment, the High Court held that since the Judgment was based on an apparent error, the VAT Regulations were made in accordance with the requisite procedure and were, as a result, valid and have the force of law.  However, KRA did not pursue the issue of W.E.C Lines’ entitlement to VAT refunds by virtue of making zero-rated supplies and therefore the same was not determined by the court.


The implication of the ruling is that the VAT Regulations are valid, and KRA may rely on the same in administering and enforcing the provisions of the VAT law. However, there are still potential substantive issues where the provisions of the VAT Regulations conflict with those of the primary legislation, the VAT Act. Where such a conflict were to arise, it is trite law that subsidiary legislation cannot override the relevant primary legislation.