'We can't tax everything and anything': High Court rules against KRA's attempt to impose VAT on Golf Club fees

In the judgment, Justice Nixon Sifuna emphasized the importance of transparency in tax matters to prevent taxation through misinterpretation or imposition of illegal taxes. The court further ruled that KRA's actions lacked legal basis.

The case arose when the Commissioner for Domestic Taxes at KRA appealed a decision by the Tax Appeals Tribunal, which had prevented them from imposing these taxes.

The judge highlighted the necessity for each tax or revenue stream to have a legal and rational basis, condemning taxation driven by whim or without proper justification.

"While this Court as the tax court will facilitate legitimate collection of tax for the economy, it has at the same time, the responsibility to guard against overzealousness, greed, unfairness, and unconscionableness in tax collection. While taxes are an inevitable and a legitimate source of government revenue, we cannot tax everything and anything.

"There must be and exist, a legal and rational basis for each tax or tax stream. Hence taxation cannot be by sheer caprice or whim, for the mere sake of taxing, or for no reason at all," ruled Justice Sifuna.

He also emphasized that KRA cannot casually disregard legitimate expectations without consulting and involving stakeholders.

"The consolidated judgment that the Tax Appeals Tribunal delivered on 27th March 2020 in the said Appeals is hereby upheld, with the consequence that the joining fee (entrance fee) and members subscription fee of Golf Clubs and Sports Clubs are exempt from Value Added Tax (VAT)."

"Just as was with the costs in the Tribunal, each party shall bear its own costs of these Appeals," ruled the court.