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SUPREME COURT CASE BRIEF - CMC Advocates
On 5 December 2025, the Supreme Court of Kenya ruled in Barclays Bank Kenya (now Absa Bank Kenya PLC) v Commissioner for Domestic Taxes that fees paid by an acquiring bank to card companies are not royalties under Section 2 of the Income Tax Act, and therefore not subject to withholding tax. The Court also held that interchange fees paid by an acquiring bank to an issuing bank are not professional or management fees, and thus also not liable to withholding tax. The decision overturned the Court of Appeal's ruling, which had treated these payments as royalties and management fees respectively.
SUPREME COURT CASE BRIEF
The Supreme Court of Kenya delivered a judgment on 5 December 2025 in Petition No. 12 (E014) of 2022 between Barclays Bank of Kenya Limited (now Absa Bank Kenya PLC) and the Commissioner for Domestic Taxes. The case concerns a tax dispute. The ruling provides guidance on tax liability and corporate restructuring.
SUPREME COURT CASE BRIEF
On 5 December 2025, the Supreme Court of Kenya delivered a judgment in Petition No. 12 (E014) of 2022, involving Barclays Bank of Kenya Limited (now Absa Bank Kenya PLC) and the Commissioner for Domestic Taxes. The case addressed a tax-related dispute between the bank and the tax authority.
RESCUE-ORIENTATION IN ADMINISTRATION PROCEEDINGS; THE CASE OF MOTORHUB VS KCB - CMC Advocates
The High Court in Motorhub Limited (Under Administration) v KCB Bank Kenya Limited [2026] KEHC 2666 (KLR) stayed the commencement of administration proceedings for 120 days to allow the distressed borrower a window to arrange repayment. The court recognized that KCB had validly appointed an administrator under a qualifying floating charge and followed due process, but granted the stay based on Motorhub's evidence of efforts to raise funds. The ruling balances secured creditors' rights with corporate rescue objectives, emphasizing that short rescue windows may be available with proper timing and evidence.
TAX APPEALS TRIBUNAL RULES THAT THE PRINCIPAL COMPONENT OF BAD DEBTS WRITTEN OFF BY LENDERS IS NOT DEDUCTIBLE - CMC Advocates
The Tax Appeals Tribunal held in Premier Credit Limited v Commissioner of Domestic Taxes that the principal amount of bad debts written off by lenders is capital in nature and not deductible for tax purposes, while interest, fees, and penalties (revenue components) may be deductible. The Tribunal lacked jurisdiction to rule on the validity of the underlying Legal Notice No. 37 of 2011. Lenders must distinguish between capital and revenue components when writing off bad debts.
The In Duplum Rule in Loan Recovery: High Court Gives Practical Guidance for Lenders - CMC Advocates
The High Court in Faulu Microfinance Bank Limited v Kenneth Mutegi Kilonzo clarified that lenders must prove the amount claimed even in undefended suits, and applied the In Duplum rule to a deposit-taking microfinance institution. The court adopted a functional definition, looking at the lender's operations rather than its licensing statute, and signaled that the rule may extend to all lenders in the financial sector. This decision emphasizes that borrower protection against excessive interest accumulation is not limited to traditional banks but applies to similar credit providers.
Environment and Land Court Declines to Halt National Land Commission Recommendations in Kakuzi Historical Land Injustice Matter - CMC Advocates
The Environment and Land Court at Murang'a declined to grant Kakuzi PLC leave to commence judicial review proceedings against National Land Commission recommendations concerning historical land injustice claims. The court found that the NLC acted within its jurisdiction under Section 15 of the National Land Commission Act and that Kakuzi PLC failed to demonstrate bias or procedural unfairness. The recommendations include the surrender of approximately 3,200 acres for settlement of vulnerable claimants and regularization of settlement schemes. The court also rejected arguments that the NLC lacked authority due to the timing of the Gazette Notice.
Environment and Land Court Declines to Halt National Land Commission Recommendations in Kakuzi Historical Land Injustice Matter - CMC Advocates
The High Court dismissed an appeal by Faulu Microfinance Bank, affirming that the In Duplum rule applies to deposit-taking microfinance institutions. The court held that lenders must prove their claims even in undefended suits and that the functional nature of a lender's operations determines whether banking law consumer protections apply. This decision signals that borrower protection against excessive interest accumulation extends beyond traditional banks to other credit providers in the financial sector.
Tax Alert – High Court Clarifies That the Cost Base of Inherited Property for CGT Purposes Is Its Market Value at the Date of Inheritance - CMC Advocates
The High Court in Commissioner of Domestic Taxes v Shah & 2 Others ruled that for capital gains tax purposes, the cost base of inherited property is its market value at the date of inheritance, not zero. The court rejected KRA's argument that no consideration was paid, affirming that inheritance constitutes acquisition and that independent valuations are valid evidence of market value. The decision reinforces the rebasing principle in Kenya's CGT regime, requiring taxpayers to document the market value of inherited property at acquisition to determine future gains or losses.
THE FINANCE BILL 2026 ANALYSIS - CMC Advocates
The Finance Bill 2026 proposes tax policy and administrative measures to raise KShs. 3.53 trillion for the 2026/27 budget. Key amendments include broadening the definitions of immovable property, management or professional fees, and royalties, as well as taxing trust income at the trustee level. The bill also streamlines instalment tax exemptions and expands interest restriction exemptions for lending or leasing businesses.
Copyright Protection in Fintech Innovation: Lessons from Peter Nthei Muoki and Beluga Limited v Safaricom PLC - CMC Advocates
The High Court in Kenya ruled that Safaricom infringed copyright in the 'M-TEEN MOBILE WALLET USSD CODE' developed by Peter Nthei Muoki and Beluga Limited. The court awarded Kshs. 1.4 billion in general damages and ordered Safaricom to pay 0.5% of its gross M-PESA revenue for each year it continues using similar functionality. The decision distinguishes between unprotected ideas and the original expression of detailed USSD menu flows, structure, and system design that qualified for copyright protection. Safaricom's independent development defense failed due to lack of documentary evidence.
AI, Access to Justice and the Misstep in Commission on Administrative Justice v Savla - CMC Advocates
The High Court in Commission on Administrative Justice v Savla held that AI-assisted drafting of court pleadings is unlawful because the Civil Procedure Rules do not expressly provide for it. The article criticizes this reasoning as overly broad, arguing that AI tools can improve access to justice for self-represented litigants and that the proper approach is to regulate misuse rather than prohibit use. It cites comparative jurisprudence from the US, UK, and Singapore, which penalize filing false authorities but not the mere use of AI. The article recommends that Kenya adopt guidelines requiring disclosure and verification of AI-generated content instead of a blanket ban.
AI, Access to Justice and the Misstep in Commission on Administrative Justice v Savla
The article examines the Supreme Court of Kenya's decision in Commission on Administrative Justice v Savla, arguing that the court's analysis of artificial intelligence in administrative proceedings missed an opportunity to clarify standards for AI use in justice. It highlights potential adverse effects on access to justice and procedural fairness in digital governance.