Category: Business Daily

Taxpayers challenging the tax assessment against them by the Kenya Revenue Authority (KRA) now face a higher threshold after the High Court placed the burden on them of ensuring indexed and chronologically matching records to back their claims.

In a high-implication decision, the High Court said that it is not enough for taxpayers to furnish KRA with documents and data challenging an assessment, adding that such data must be indexed and chronologically matched.

‘The law does not require the Commissioner to play the role of a forensic accountant. When a taxpayer is asked to explain why their own tax declarations do not add up, the taxpayer must provide clear, specific and indexed reconciliation. Flooding the Kenya Revenue Authority with unindexed and chronologically mismatched files is not an act of compliance; it is evasion of the taxpayer’s evidential duty,’ the High Court said.

A tax assessment is an official calculation by the KRA that shows how much a taxpayer owes the government. The system relies primarily on self-assessment when filing returns through the KRA, though the tax authority can issue amended, default, or additional assessments if discrepancies are found.

The directive came as the High Court overturned a November 10, 2023 determination by the Tax Appeals Tribunal, which threw out a Sh29.21 million assessment by KRA against Jakoline Enterprises Ltd. It argued that the Tribunal erred in assessing Jakoline Enterprises Ltd’s data submitted as a rebuttal challenging the assessment.

The Sh29.21 million assessment by KRA against Jakoline Enterprises Ltd stems from Sh14.48 million in income tax obligations and Sh14.73 million in value-added tax (VAT) obligations for the period 2017 to 2020.

According to KRA, the figure was arrived at following an audit that revealed inconsistencies between purchases claimed in Jakoline Enterprises Ltd’s Corporate Income Tax returns and the purchases made in its monthly VAT returns.

The High Court, in its judgement, took the Tax Appeals Tribunal to task over its decision on the data and documents submitted by Jakoline Enterprises Ltd when challenging the assessment raised by KRA.

The judgement by the High Court finds that the taxpayer’s evidence failed to meet critical thresholds prescribed in both the Tax Procedures Act and the Tax Appeals Tribunal Act.

‘Jakoline Enterprises Ltd failed to discharge its statutory burden under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act. By holding that such unstructured data presentation shifted the duty back to the state, the Tax Appeals Tribunal committed a profound error of law. The tribunal’s decision was based on fundamental misapplication of the rules of evidence and cannot be allowed to stand,’ the High Court states.

The High Court judgement means that businesses, especially those that are in the small and medium category, will have to place particular attention to their record keeping to ensure that their tax ledger is well regularised and defensible should it trigger an assessment by KRA.

This judgement comes at a time when taxpayer data and its use in compliance has come under sharp scrutiny following Finance Act 2026’s introduction of a dual assessment income tax regime in the country, which now allows KRA to leverage third-party data in verifying a taxpayer’s compliance.

Cyber cafés in Kenya will from Friday be required to keep customers’ records such as names, identification numbers, the computer used and login time in fresh efforts to curb cybercrimes like mobile money theft and SIM swap fraud.

New regulations published by the Communications Authority of Kenya (CA) demand that the internet shops issue receipts and keep the records for a minimum of three years, during which the regulator can request them for investigation.

Public internet cafés do not enforce strict user identification, making them attractive to cybercriminals seeking to browse, steal data and hack without being traced through their personal IP addresses.

They also give criminals access to a large pool of personal data like ID numbers, names, passwords and phone numbers of users who log into their accounts using unsecured public computers.

The new regulations come amid a surge in SIM swap and mobile money fraud in Kenya, leading to billions of shillings in losses.

‘Put in place a mechanism for registering customers,’ say the new CA licensing regulations for public communications access centres, which take effect on August 14.

‘Maintain basic user logs of service usage, essentially a customer session log (excluding personal browsing history), which will cover the terminal ID, session start and end time.’

Customer session logs record users’ interactions with websites or apps, tracking login times, page views, and clicks. Terminal IDs are unique codes that help businesses track which of their computers processed a transaction. Such data helps IT system managers monitor behaviour, troubleshoot errors, and audit security to nab fraudsters.

‘The licensee shall grant the authority’s authorised officers’ reasonable access to premises, systems, records, and equipment for the purpose of inspection, audit, or investigation,’ the rules say.

Those in breach of the regulations face fines equivalent to 0.2 percent of their annual turnover, with the minimum penalty set at Sh500,000. They also face business closure.

Kenyans lost Sh491.6 million ($3.8 million) and cryptocurrency after cyber-criminals hijacked victims’ mobile phone numbers in the SIM-swap fraud.

International Criminal Police Organization (Interpol) reckons that Kenya’s SIM swap fraud surged by 327 per cent last year on the back of increased use of mobile money platforms.

Read: How Kenyans lost Sh491m, cryptos via SIM hijack

The surge in attacks highlights the risk of cyber heists in the wake of lenders’ heavy investments in tech and mobile banking.

Through SIM swap fraud, fraudsters hijack victims’ phone numbers, gaining unauthorised access to sensitive accounts such as banking, mobile phone wallets and cryptocurrency platforms. It occurs when a fraudster convinces a mobile carrier to transfer a victim’s phone number to a SIM card they control, exploiting the legitimate feature of mobile number portability.

Once the swap is complete, the victim’s phone loses network connectivity, and the fraudster receives all calls and texts, including one-time passwords for account access.

Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones with or without a bank account.

This has become a hackers’ paradise. Mobile banking was the hardest hit, with criminals siphoning off Sh810.68 million in 2024, translating to a 344 percent rise from Sh182.41 million in the prior year.

The thefts often happen on Friday and Saturday night, with millennials-individuals born between 1981 and 1996- being the most affected.

Cyber cafés in Kenya boomed in the late 2000s and early 2010s in the cities and larger towns.

But widespread use of smartphones and cheaper, faster mobile data have largely replaced the need for traditional internet browsing at cyber cafés.

Cybercriminals are exploiting public internet shops by installing malware on their unsecured computers to record customer usernames, passwords, and banking details, and intercepting their networks to snoop on customers’ activity.

The criminals run their activities anonymously because police struggle to track them as the majority of the cafés do not enforce strict user ID checks.

The CA previously proposed mandatory CCTV surveillance for all cafés but has dropped the requirement in the latest rules.

The new rules also require cyber cafés to install software and set network filters in their computers that block access to illegal websites and scan web traffic in real time to stop dangerous downloads or illegal files.

They also bar café owners from bandwidth reselling – buying bulk data or a high-capacity connection from internet service providers and breaking it down to sell smaller amounts to end users – without the CA’s approval.

The new rules also seek to stamp out other internet offences like piracy, document forgery, identity theft and cyberbullying. Businesses in breach of the new regulations face closure.

‘The authority may suspend the licensed services where the licensee has breached a condition in this licence and the licensee has been notified of the breach of the licence condition and has been given notice to comply within a specified period and failed to comply,’ the CA says.

Africa’s financial services sector is entering one of the most significant transitions in its history. Artificial intelligence, digital lending, behavioural analytics and open banking are rapidly changing how financial institutions assess borrowers, price risk and extend credit.

Yet amid all this advancement, one lesson stood out during the recent East African Banking School Conference held at Diani, Kenya: the future of lending will not be determined by technology alone, but by the ability to combine data, human judgement and responsible finance.

For many years, lending decisions largely depended on collateral, financial statements and the experience of credit officers. Today, those traditional indicators are increasingly being complemented by behavioural data, mobile money transactions, digital footprints and machine learning models. Financial institutions can now analyse thousands of data points within seconds to estimate the probability of default.

Related

Columnists

Why Kenya’s growth goals demand a new kind of legal adviser

Aug 03 – 5 min read

Columnists

How aviation can be a frontline defence against human trafficking

Aug 06 – 4 min read

However, conference discussions repeatedly emphasised an important caution: algorithms should support lending decisions, not replace professional judgement. Every credit model should be explainable. If a bank or microfinance institution cannot explain why a customer was declined or approved, the institution risks embedding bias, weakening governance and exposing itself to regulatory and reputational challenges.

The quality of lending will therefore depend on the quality of data. Inaccurate, incomplete or outdated data inevitably produce poor credit decisions. Financial institutions must invest in data governance, ensuring that information is reliable, complete, timely and secure. Equally important is protecting customer data. In an era of increasing cyber threats and stringent data protection requirements, trust remains one of the banking industry’s most valuable assets.

Another important shift is the changing profile of Africa’s borrowers. With the continent’s median age below 20 years, Generation Z represents the next frontier of financial inclusion.

Yet many young borrowers own few traditional assets. They rent rather than own homes, rely on ride-hailing services instead of purchasing vehicles, earn income from informal or digital platforms, and conduct much of their financial lives through mobile phones.

This raises a fundamental question: Are financial institutions still lending using yesterday’s collateral for tomorrow’s customers?

Perhaps the industry should begin viewing behavioural consistency, cash-flow patterns, digital transaction histories and demonstrated financial discipline as forms of collateral alongside traditional security. Character and repayment behaviour may become valuable predictors of future credit performance.

Fortunately, financial institutions already possess significant amounts of customer data. Mobile money transactions, bank statements, bill payments, savings patterns, school fee payments and business cash flows all provide useful insights into customers’ willingness and ability to repay. The challenge is no longer collecting data, it is converting that data into better lending decisions.

Equally important is recognising that not all growth is good growth. Conference participants observed that smaller ticket loans often perform better than large exposures because they allow lenders to build borrower relationships gradually while limiting downside risk.

Progressive lending enables institutions to reward responsible repayment behaviour with larger facilities over time instead of taking excessive risks at the outset.

Technology is also reshaping partnerships across the financial services ecosystem. Increasingly, banks, fintech firms, credit reference bureaus, mobile network operators and data analytics firms are collaborating to improve customer acquisition, underwriting and collections. Products such as Fuliza in Kenya and Songesha in Tanzania illustrate how partnerships can expand financial access while creating sustainable business models.

Yet the conference also challenged lenders to rethink responsibility in digital finance. Digital loans have increased financial inclusion and generated attractive returns. However, they have also contributed to over-indebtedness among some borrowers, particularly where multiple lenders compete aggressively for the same customers. Responsible lending requires balancing commercial objectives with customer wellbeing.

One particularly striking observation was that many non-performing loans are created long before customers default. Weak credit appraisal, inadequate due diligence and poor underwriting decisions eventually translate into costly recoveries and write-offs. In many respects, collections merely reveal mistakes made during loan appraisal.

This reinforces the need for institutions to strengthen credit assessment rather than relying solely on aggressive debt recovery strategies.

The conference further highlighted climate change as an emerging source of credit risk. Following the economic disruption caused by the COVID-19 pandemic, climate-related events, including floods, prolonged droughts and other extreme weather conditions, are increasingly threatening household incomes, agricultural production and business continuity.

Financial institutions should therefore begin integrating climate considerations into credit appraisal, portfolio monitoring and stress testing.

Perhaps the greatest lesson from the conference was that successful lending will continue to depend on people. Artificial intelligence can analyse patterns. Algorithms can rank risks. Data can improve predictions. But trust, ethical judgement, customer understanding and professional scepticism remain fundamentally human capabilities.

For Kenya’s banks and microfinance institutions, the competitive advantage of the future will not simply lie in adopting more technology. It will lie in developing institutions that combine high-quality data, skilled people, responsible governance and customer-centred innovation.

Those institutions will not only grow healthier loan portfolios but will also become more attractive to investors seeking well-governed financial institutions capable of delivering sustainable returns.

The future of lending, therefore, belongs neither to algorithms nor to intuition alone. It belongs to institutions that successfully integrate technology with human judgement, innovation with responsibility, and growth with trust.

Professor David Mathuva is an Associate Professor, Accounting and Financial Markets at Strathmore Business School

One year from today, Kenyans will troop to polling stations to deliver a verdict on who governs them until 2032.

They will choose whether to hand President William Ruto another five-year contract or clear the way for someone else.

In the same election already framed as ‘Tutam’ versus ‘Wantam’, the voters will elect 290 members of the National Assembly, 47 governors and their deputies, 47 woman representatives, 47 senators, and 1,450 members of county assemblies.

Notably, it will be the second election since 1997 in which Raila Odinga’s name will not appear on a presidential ballot paper. Mr Odinga died last October. ‘There will never be another Raila. But the ideals he stood for live,’ his daughter Winnie said.

In 2022, there were 46,229 polling stations. For 2027, the Independent Electoral and Boundaries Commission (IEBC) is expected to add more stations. The IEBC register had at least 22.1 million voters in 2022, and it is projected that at least 6.3 million will be added to the register, making it approximately 28.5 million.

The commission is planning a mass voter registration exercise for January next year, which will run for 30 days from January 11 to February 9. The political landscape is expected to keep changing ahead of D-Day, largely on the opposition side.

Even Dr Ruto, who already has a working arrangement with the Orange Democratic Movement (ODM) led by Siaya Senator Dr Oburu Oginga under the broad-based government, is still courting more parties, with some from the opposition expected to join him, particularly in the event of a falling-out over who should fly the opposition’s presidential flag.

To put its house in order, on August 3, the Azimio coalition council, chaired by former President Uhuru Kenyatta, ratified its restructuring. It admitted Dr Fred Matiang’i, Mr Peter Munya and Mr Lenny Kivuti as council members. It also brought in Mr Justin Muturi’s Democratic Party, the People’s Democratic Party and the Umoja na Maendeleo Party. Further, the council resolved to rebrand and settle on one candidate to face the President.

It also opened talks with Mr Rigathi Gachagua’s Democracy for the Citizens Party and Linda Mwananchi, the movement fronted by Nairobi Senator Edwin Sifuna. Before this, Mr Kenyatta named Wiper leader Kalonzo Musyoka the Azimio coalition party leader, a position that had been occupied by Mr Odinga. The convener of all this is a man who cannot himself stand. Mr Kenyatta is term-barred, holds no party office of consequence in the new arrangement, and works almost entirely off-camera.

People’s Liberation Party leader Martha Karua and Democratic Action Party of Kenya’s Eugene Wamalwa are other principals in the united opposition. As the opposition negotiates, the President is assembling a ground network in full public view. In the first week of August alone, State House hosted village elders on Tuesday, Muslim leaders on Wednesday and more than 5,000 private security guards on Thursday.

‘Are you ready?’ the President asked one of the gatherings.

He appreciates the weight of the task at hand. ‘Will you help me spread this word to the people in the villages?’ he added.

The most recent findings of the Tifa Research opinion poll-fielded between June 13-22 among 2,048 respondents across nine regions and released on July 24-puts the President at 24 per cent, unchanged from May. That is a weak number for an incumbent. He is also, at present, the winning candidate.

Senator Sifuna is second at 15 per cent, up from 10 in May and from effectively nothing in late 2025. Mr Musyoka has fallen to 13 per cent from a peak of 25 per cent in November 2025. One respondent in five is undecided.

Tifa recorded Mr Sifuna leading in Western, Dr Matiang’i in Nyanza, Mr Musyoka in Lower Eastern, Mr Gachagua in Mt Kenya and the President holding the Rift Valley and the north.

Among those opposed to the President’s re-election, 62 per cent said Mr Gachagua should back the strongest opposition candidate rather than run.

Some 14 percent wanted him to lead the ticket. ‘The 2027 presidential race remains highly fluid, with no single candidate commanding dominant national support. While President William Ruto leads at 24 per cent, the findings show growing competition from other opposition figures.

The data also points to a fragmented opposition landscape, with support spread across multiple leaders rather than consolidating around a single challenger,’ Tifa noted.

Buoyed by the Ol Kalou MP by-election where the opposition candidate trounced the ruling United Democratic Alliance party, united opposition hopes to replicate that at the national stage. The dynamics may be different but only time will tell.

Based on previous cases, the risk of violence increases when elections are approaching and the incumbent is seeking re-election.

The 2007 and 2017 elections are examples of this, especially when the incumbent appears to be facing a strong challenger. In both of these elections, the challenger was Odinga. The same applies to the prospect of a united opposition fielding a single, strong candidate to compete with Dr Ruto.

The Kofi Annan Foundation’s Electoral Vulnerability Index 2026-27, released on July 13, warns of a high risk of electoral violence next year. It puts the probability at 81.6 per cent.

‘Economic hardship, tax protests, opposition mobilisation, debates over the cost of living, and public anger over corruption and police conduct have marked the political environment since 2022.

‘Youth-led protests and civic activism have shown that grievances can mobilise beyond traditional party structures. The 2027 cycle may, therefore, combine conventional presidential competition with broader accountability demands,’ the foundation notes.

Although the stakes remain high, the risks are lower when an incumbent is retiring, as happened in 2013 and 2022 when Mwai Kibaki and Uhuru Kenyatta retired, respectively. Compared to its neighbours, Kenya has a paradox of strong institutions, such as the Judiciary and electoral body but suffers low public trust.

The Kenya Private Sector Alliance says general elections significantly disrupt economic growth every five years. Investors tend to hide their money and adopt a wait-and-see attitude, which has a devastating ripple effect. Even farming is affected.

There is also a growing fear of hired gangs, locally referred to as goons, and how they will be used in campaigns. Politicians are already using them to subdue opponents.

‘These goons are innocent children who are being used by bankrupt politicians. They cause chaos, assault people and wreak destruction,’ Dr Ruto acknowledged at a previous event. ‘All the goons should be dealt with firmly, and those paying these young people should be tracked down too.’

Dr Ruto is expected to reorganise his Cabinet for the last time in his first term early next year, particularly after resignations by those keen to stand for election.

At least four Cabinet Secretaries have separately confided to their aides that they intend to run for governor next August. The IEBC has set a deadline of February for public officers keen to run for elective seats to resign. Meantime, each camp is faced with weighty decisions that will determine whether they succeed or fail-to either usher in a new order or guarantee continuity.

Busy programmes

Action has already shifted to the ground, with a busy itinerary for aspirants starting on Thursday and continuing until Sunday. If they are not addressing congregations in churches, they are attending funerals or weddings, or hosting delegations at home.

It has become commonplace to find Cabinet Secretaries and other senior government officials working in Nairobi from Thursday onwards, in what we have learned is a verbal instruction to bring ‘government services closer to the people’.

The IEBC is expected to officially publish the limits of expenditure, contributions and donations in the Kenya Gazette today, with the aim of instilling electoral discipline. This is intended to prevent voters from succumbing to undue influence from wealthy candidates.

The electoral agency has proposed a campaign spending limit of Sh4.44 billion for presidential candidates. In the proposals contained in the campaign limits, governor, senator and woman representative candidates in remote counties such as Turkana will be permitted to spend the highest amounts, capped at Sh123 million.

Candidates contesting similar positions in Nairobi will have a spending limit of Sh117.3 million, while those in Marsabit and Wajir will be allowed to spend up to Sh114 million and Sh113.8 million respectively.

Keen to secure a second term in office, Dr Ruto will decide whether to retain Prof Kithure Kindiki as his running mate or succumb to pressure from his newfound partners in the ODM to award them the position. With ODM on board, rebranding could also result in the formation of a new alliance to replace Kenya Kwanza.

The ongoing realignment in the political chess game will have a significant impact on this. For example, depending on the pairing chosen by the united opposition-assuming they present a single candidate-Dr Ruto may need to adjust his strategy in the hope of guaranteeing victory.

Time is of the essence. The urgency of the moment is not lost on the leading parties, that are either keen to retain power or to wrest it from the incumbent.

Today, Dr Ruto and his broad-based partner, Dr Oginga, are hosting MPs, governors and their deputies allied to them at Lake Naivasha Resort. Insiders say the purpose of the meeting is to map out Dr Ruto’s ‘path to victory’ in the face of a sustained onslaught to deny him a second term.

It is a moment of reckoning, not just for the President, but also for MPs, governors, and ward representatives, who have returned to basics in an attempt to shore up their chances of re-election. This has already resulted in the traditional quorum issues that the August House is all too familiar with in an election year. County assemblies are not spared either.

Based on past elections, the approximate turnover rate for lawmakers is 56 per cent. The general election, which both sides are billing as a matter of life and death, will, as in previous elections, see some careers terminated and others begun.

Mr Gachagua, who was impeached in 2024 and has since become one of Dr Ruto’s foremost critics, admits that the task facing the united opposition is not an easy one. ‘Removing a sitting President from office is not easy. That’s the truth, and it’s the reason I work so hard-it’s a tough job. Let’s stop these workshops and hotel meetings. First, let’s lock Ruto out of Kenya. I am not rogue, just strategic,’ he said last Thursday.

All of Dr Ruto’s predecessors served at least two terms. Jomo Kenyatta, the founding president, served for 15 years and died in office, while his successor Daniel Moi served for 24 years, including two terms that followed the constitutional limit provision. Dr Ruto’s predecessor, Kenyatta, served for 10 years, as did Kibaki.

Concerns

However, with the clock ticking towards August 10, the electoral body is not inspiring much confidence in terms of preparations.

Of particular concern is the underperforming electoral agency. It faces a funding deficit of at least Sh335 billion in its quest to prepare adequately, with critical logistical and infrastructural changes driving up the costs.

The commission warns that unless Parliament approves a supplementary budget, the shortfall will adversely affect its preparedness for the election.

At the same time, the enactment of election-related laws intended to safeguard the integrity of the vote has also stalled.

Although National Assembly Speaker Moses Wetang’ula pledged to fast-track the laws, nothing has moved a year later, sparking institutional anxiety over preparedness for a credible poll.

The IEBC has raised the alarm, warning that enacting electoral laws too close to an election year ‘severely compromises’ its operational planning and procurement within strict statutory timeframes. These much-needed changes stem from proposals in the National Dialogue Committee (Nadco) report on the Elections Act, the Election Offences Act, and the Political Parties Act.

Additionally, there is the draft Election Campaign Financing (Amendment) Bill, 2020, and the draft Election Campaign Financing Regulations, 2020. The passage and implementation of these bills are designed to ensure a level playing field in election campaigns. The bills were published last year, passed in the Senate, and sent to the National Assembly for approval.

The IEBC Act, which expanded the selection panel responsible for recruiting the current IEBC commissioners, is the only success story highlighted in the Nadco report.

The Kenya Revenue Authority (KRA) has lost its bid to deny Consolidated Bank of Kenya a Sh264.9 million bad debt tax deduction tied to unpaid loans by borrowers, marking a significant victory for the industry.

The Tax Appeals Tribunal ruled that the money a bank loses after customers fail to repay loans is a normal cost of running a lending business and can be deducted before tax is calculated.

The tribunal set aside KRA’s objection decision of September 18, 2025, finding that the tax authority wrongly treated the written-off loan principal as capital expenditure instead of stock-in-trade. It allowed the bank’s appeal.

The dispute originated from a KRA compliance audit covering Consolidated Bank’s tax affairs between 2019 and 2023. The audit initially resulted in tax assessments of Sh3.67 billion across withholding tax, corporate income tax, value-added tax, pay-as-you-earn, excise duty and other tax heads.

One contested item was KRA’s rejection of Sh264.9 million in bad debt deductions claimed for the 2019 financial year.

KRA had adjusted the bank’s tax losses after disallowing the deduction, arguing that the written-off amounts represented loan principal and were therefore capital in nature.

The authority maintained that only interest earned on loans constitutes taxable income and that principal amounts could not qualify as deductible expenses when written off.

Consolidated Bank challenged that position before the tribunal, saying lending money was its core business and that unrecovered loans were genuine trading losses incurred in generating taxable income.

It said it had supplied extensive evidence showing reasonable efforts to recover the debts before writing them off.

The bank produced bank statements, customer-by-customer analyses, letters of offer, auctioneers’ correspondence, auction notices, memoranda of sale, credit reports and court decisions to demonstrate that it had exhausted recovery efforts before claiming the deductions.

It also argued that customer deposits used to finance lending remained liabilities that had to be honoured whether borrowers repaid their loans or not, making defaults a direct trading loss rather than a capital investment loss.

The tribunal agreed that the central dispute was whether the principal component of bad loans should be treated as capital or revenue expenditure for tax purposes.

In banking, bad debts are loans that borrowers have failed to repay after the lender has exhausted reasonable recovery efforts, leading the bank to write them off in its accounts.

The tribunal observed that both sides accepted the loans had become bad and that the disagreement concerned only their tax treatment.

After reviewing the Income Tax Act and previous tribunal decisions, the panel concluded that KRA had wrongly classified the written-off loan principal as capital expenditure.

“It is the finding of the tribunal that the respondent erred in disallowing the appellant’s bad debts,” the tribunal stated.

It added that the bank “was entitled to the tax losses as the principal amount was stock-in-trade and the same was not capital expenditure.”

The tribunal further held that because KRA had improperly rejected the deduction, the corresponding reduction of the bank’s 2019 tax losses could not stand.

“The principal amount advanced was stock for trading, and the same was not capital expenditure. On this premise, the tribunal finds and holds that the respondent erred in disallowing loan write-off,” the panel said, quashing KRA’s objection decision.

The Kenya Revenue Authority (KRA) has been blocked from demanding taxes on service charge collections by building and estate managers following a four-year dispute with Nextgen Mall Management Company.

The Tax Appeals Tribunal ruled that Nextgen Mall Management Company only handled funds as a conduit for unit owners to obtain basic upkeep services like grass cutting, security, bin cleaning, and management fees.

It ruled that the monies it held from service charges and property owners’ contributions were not earnings that should attract income tax and value-added tax (VAT), setting a precedent in an era that has seen the rise of management companies taking charge of upkeep in gated communities, office blocks and apartments.

The taxman, through the Commissioner of Domestic Taxes, had slapped Nextgen with a Sh119.8 million income tax and value-added tax (VAT) claim, dating back to 2016.

The tax obligations included income tax arrears of Sh38.5 million covering the years between 2016 and 2020, as well as VAT obligations of Sh81.3 million for the years between 2017 and 2020, bringing the total to Sh119.8 million.

The firm – established to manage the common areas of Nextgen Mall on Mombasa Road in Nairobi on behalf of purchasers of units from Nextgen Office Suites Limited, which is the developer – objected to the KRA demands at the Tax Appeals Tribunal.

This gave birth to a legal battle that has been ongoing in the corridors of justice since September 7, 2022.

A KRA audit of the firm triggered the Sh119.8 million tax demand.

KRA argued that the service charge contributions collected from unit owners constituted taxable business income.

It reckoned that the firm is a private company whose primary economic activity is real estate activities, specifically the management of Nextgen Mall, and that it was selected for audit after declaring income in its Income Tax returns while remaining unregistered for VAT.

The taxman said that the firm’s transactions attract tax because it offers services and charges a fee, arguing that it is not a passive holding company.

KRA said firms receiving service charges can only escape taxation through an exemption granted in law.

The firm maintained that it merely collects service charges on behalf of property owners and uses the funds to pay third-party service providers responsible for maintaining the common areas of the mall, including garbage collection, payment of utility bills and repair works within the common areas.

The case narrowed down to two issues: whether service charge and member contributions constituted income chargeable to Income Tax; and whether the service charge and member contributions collected attract VAT.

On the first issue, the Tribunal ruled that service charge collections were fiduciary pass-through funds held by the management company for the benefit of unit owners through settlement of service costs in the common areas.

The Tribunal added that the management company is a vehicle for owners to pool and spend their own monies, arguing that the firm offers no service on its own account, adds no margin and retains nothing as a fee.

The Tribunal noted that the company neither earned nor retained cash, arguing that the contributions cannot be treated as taxable income.

On VAT, the Tribunal found that the company did not supply management services.

On the contrary it noted that the services were being supplied by independent property managers who had already charged and accounted for VAT and therefore subjecting the service charge contributions to VAT again would amount to taxing the same services twice.

The Tribunal rejected KRA’s move that forced registration of the firm under Section 34(6) of the VAT Act on the strength of the firm having made taxable supplies exceeding the registration threshold of Sh5 million, arguing that the contributions do not attract taxation.

Consequently, the Tribunal on July 27, 2026, found that the service charge and member contributions are not a taxable supply, and that KRA erred in subjecting the fees to VAT.

The Tribunal allowed KRA to tax the company’s own incidental commercial income, such as kiosk and market stall rentals.

‘The upshot of the foregoing analysis is that the Appeal is merited and the Tribunal accordingly proceeds to issue the following Orders that the Appeal be and is hereby allowed; the Respondent’s objection decision dated December 2, 2025, be and is hereby set aside. Each party to bear its own costs. It is so ordered,’ reads a ruling by Justice Gloria Awuor Ogaga.

‘The decision reinforces the principle that fiduciary funds held on behalf of third parties are not taxable income merely because they are received and administered by a management company, providing the much-needed certainty to the real estate and property management sector,’ said Diro Advocates LLP.

The verdict brought to a close a winding legal battle that started at the Tribunal, then to the High Court in 2024, before returning to the Tribunal.

‘It is the Tribunal’s considered view that the Appellant is a conduit through which the owners pool and disburse their own monies; it renders no service on its own account, adds no margin, and retains nothing as a fee.’

Like many corporate executives whose professionalism is forged in years spent occupying the coveted corner offices of some blue-chip companies, Mwangi wa Iria joined entered politics with what appeared to be an almost evangelistic mission of transforming lives even as he thought he would help cleanse a system poisoned by corruption and ineptitude.

He drew confidence from his success at the Kenya Cooperative Creameries (KCC), where he had inherited a state corporation struggling to process milk, sell its products and pay farmers.

He also oversaw policies that helped raise the farm-gate price of milk from Sh5 to Sh30 a litre by 2006, he says.

More than a decade after he was first elected governor of Murang’a, Wa Iria is fighting to hold on to assets creditors have put up for sale, including his Karen home and a hospital.

At the same time, the Ethics and Anti-Corruption Commission is pursuing the former governor over claims that assets linked to him were acquired from corruption. The agency is eyeing Sh542.6 million linked to contracts awarded by the devolved government of Murang’a during his tenure. The allegations remain contested.

The sad turn of events for Wa Iria, after he had painstakingly forged a suave image in corporate Kenya speaks of the murkiness of politics.

Born Francis Mwangi on August 28, 1964 in Kahuro, Wa Iria grew up in what he describes as a typical rural setting, drawing water from the river, picking coffee beans and tending animals.

He attended Kiboi Primary School and Wethaga Boys High School before joining Moi University and later pursuing further studies in purchasing and supply in the UK.

In 1993, he joined East African Breweries Ltd as a junior sales manager. By the time he left in 2002, he had risen to national sales manager, giving him experience in one of the country’s biggest consumer businesses.

His next assignment would prove more consequential. In 2002, then-Cabinet minister John Michuki identified him as the man chosen to spearhead reforms at KCC.

‘That young man has been found from this area and is none other than this man whom I have known since his childhood. I hope he won’t let me and you down in his duties,’ Michuki said at Wethaga Catholic Church.

Wa Iria rolled up his sleeve and got to the work of reviving KCC. He renamed it New KCC, revived the processor and returned it to profit-making, he told this publication.

The turnaround became the foundation of his public reputation and would later provide him with the identity that followed him into elective politics.

His tenure, however, was not without controversy. He clashed with then Co-operatives minister Joe Nyagah over the future of the company. Nyagah accused Wa Iria of giving President Mwai Kibaki the impression that New KCC was capable of remitting to the Exchequer the Sh200 million it had received for reforms, even as the government was thinking of returning the processor to farmers.

Wa Iria’s contract was not renewed in 2007.

He subsequently joined the Aga Khan Foundation as a logistics officer before resigning in 2012 to join elective politics.

Besides KCC and the Aga Khan Foundation, Wa Iria served as national sales manager at Kenya Breweries, managing director of Ngano Feeds, chief executive of Freshco Seeds and general manager of the commercial division of Industrial Promotion Services.

It is this background that helps explain the unusual way in which he approached politics.

He was a corporate executive who entered politics carrying with him the language of management, production and enterprise – particularly in agriculture, dairy and cooperatives.

That Wa Iria was steeped into politics can be explained by the fact that his home county has arguably minted most Kenya’s billionaires, including Equity Group Chief Executive James Mwangi, former Equity chairman Peter Munga, Chris Kirubi, Jimnah Mbaru, Benson Wairegi and Gerald Gikonyo.

For a while, Wa Iria too, seemed keen on following in the footsteps of these entrepreneurs.

Then he took the plunge in 2013. Wa Iria abandoned the corporate world to contest the Murang’a governorship on The National Alliance ticket.

He emerged victorious, becoming the county’s first governor. It was the beginning of a career that would keep him at the centre of Murang’a politics for the next decade.

His first term was turbulent. In October 2015, some 34 of the 49 ward representatives voted to impeach him over several allegations, including gross misconduct and abuse of office.

His biggest undoing, according to the assembly? Acting like a know-it-all CEO.

‘He carries himself as an oasis of wisdom and those of us mandated with oversight duties have no other business apart from drinking straight from that oasis with total submission,’ said Waithera wa Maua, the MCA who sponsored the impeachment motion against the governor.

Yet Wa Iria survived the storm and returned to his office the following day.

The episode also revealed the combative side of the politician.

Critics and opponents accused him of being dictatorial, arrogant and a lavish spender, while Wa Iria portrayed the impeachment effort as a scheme by rivals who wanted to derail his administration.

He survived and sought a second term in 2017 under the newly formed Jubilee Party, which was led by then-President Uhuru Kenyatta and Deputy President William Ruto, the current head of state.

Wa Iria retain the Murang’a governorship in the August 2017 General Election, one of only 12 county bosses who successfully defended their seats. Official election results show he garnered 349,904 votes.

Wa Iria’s second term increasingly became a launchpad for national ambitions.

In 2022, three years after securing his second term, he set sights on the presidency.

He became the presidential flagbearer of the Usawa Kwa Wote party, campaigning on an agricultural and household economic empowerment platform.

Predictably, his presidential campaign was centred on transforming lives through farming.

His slogan of ‘One Home, One Cow’ sort to connect his political message to the dairy industry that had propelled him to the national limelight.

His proposition was that every family should have a cow capable of producing milk and generating income. So in love was Iria with the dairy industry, that his Usawa party adopted a cow as its symbol.

But his presidential ambition never reached the ballot.

In May 2022, the Independent Electoral and Boundaries Commission removed his name from the presidential nomination register after determining he had not met the required threshold for valid supporting signatures. Wa Iria protested at the Bomas of Kenya, insisting he had met the requirements.

By July, he had abandoned the presidential contest and endorsed Azimio la Umoja One Kenya Coalition’s chief Raila Odinga. He even told Murang’a voters to support Odinga while seeking a place in a prospective government.

The failed presidential bid marked another turn in a political journey that had begun with a corporate executive convinced that management principles could be deployed in public service effectively.

His years in office also left a mixed legacy. Wa Iria’s administration pushed dairy development and healthcare projects, including the establishment of the Kenneth Matiba Eye and Dental Hospital and investments in milk collection and processing.

His government also launched the ‘one home, one cow’ programme in Murang’a, seeking to use dairy farming as a household income-generating activity.

But the political battles never quite disappeared.

EACC investigations have followed him beyond the governor’s office. The anti-corruption agency now says contracts valued at Sh542.6 million were irregularly awarded to Top Image Media Consultants between 2013 and 2017 and that proceeds from the contracts were channelled to Wa Iria, his household and associates.

The High Court subsequently froze properties in Nairobi’s Umoja Innercore and Mweiga, Nyeri, pending determination of the EACC’s asset recovery lawsuit.

Wa Iria and the other parties have contested the allegations. In December 2022, the High Court also allowed EACC to freeze two properties belonging to Wa iria’s wife after the commission told the court that the assets might have been purchased using proceeds of corruption.

Young people are full of energy, ideas and an unwavering belief that tomorrow can be better than today. As the generation that will inherit the consequences of climate change, they are also among the best placed to develop solutions that make communities more resilient while creating new economic opportunities.

Kenya’s challenge is no longer whether young people have brilliant ideas. It is whether the country is willing to invest in them.That question came into sharp focus last week as the Kenya Community Development Foundation (KCDF) awarded Sh31.5 million to seven youth-led enterprises through the Young Environmentalist Innovation Challenge.

Drawn from more than 700 applications across the country, the winners are tackling some of Kenya’s most urgent environmental problems with practical, market-driven solutions.

One enterprise is transforming marine plastic waste into durable school furniture. Another is converting discarded banana stems into biodegradable paper packaging. Others are producing organic fertiliser for healthier soils, developing solar cooking technologies, harvesting drinking water from atmospheric moisture, turning hazardous mining waste into affordable building materials, and transforming discarded synthetic hair into fashionable products.

Collectively, these innovations tackle waste management, water scarcity, clean energy, sustainable agriculture, affordable housing and the transition to a circular economy. They demonstrate that environmental sustainability and economic growth are not competing priorities. The two can reinforce each other.

Kenya has earned global recognition as a climate leader through investments in renewable energy and active participation in international climate negotiations. However, real climate leadership will ultimately be measured by the country’s ability to nurture home-grown enterprises that generate jobs while solving environmental challenges.

The seven winners are a glimpse of the country’s untapped potential. Behind them are hundreds of other innovators whose ideas may never leave the drawing board because of limited access to finance, mentorship, markets and business development support.

The challenge is not a shortage of innovation but absence of a system that consistently helps turn promising ideas into thriving enterprises.

This is why partnerships such as the one between KCDF and the I and M Foundation deserve attention. By combining grants with mentorship, technical support and access to networks, they recognise that successful businesses require more than seed funding.

Vision 2030 aspires to transform Kenya into a globally competitive and prosperous nation. That ambition will not be achieved by policy alone. It will be realised by young innovators who see value where others see waste, opportunity where others see crisis, and who are building businesses that protect the environment while creating livelihoods.

The Office of the Data Protection Commissioner (ODPC) recently published a set of guidance notes on the use of emerging technologies including artificial intelligence (AI) and privacy enhancing technologies such as encryption.

The guidelines come at a time when the adoption of these technologies is growing significantly, particularly in the private sector where investment in digital technologies has been rising in recent years.

In its guidance note on AI the ODPC acknowledges that the nature of AI systems introduce new data protection challenges that existing regulations do not fully address.

This includes the opacity of algorithmic models, the risk of discrimination from biased training data, the reduction of human oversight and the generation of predictions about data subjects without their input among others.

The guidelines are thus meant to introduce an additional layer of regulations aimed at protecting Kenyans and are a welcome development, even as some would argue they should have come sooner.

AI use has been deployed for years in the country to create consumers’ credit scores, read through employment resumes, diagnose diseases and develop hyper-targeted advertising and entertainment content.

The guidelines apply to both public and private entities that develop AI systems trained on personal data, produce recommendations or decisions based off of this data or use these technologies in automated decision-making.

They are also based on existing regulations including the Data Protection Act and the Data Protection (Registration of Data Controllers and Data Processors) Regulations and thus extend protections introduced in 2019.

On the one hand the guidelines are crucial for consumer protection as they apply to a broad swathe of entities, ranging from insurance companies to telecommunication firms, airlines, hospitals and streaming platforms.

For instance, a lending company that uses an AI-based credit scoring model is expected to test the model to ensure it does not produce adverse outcomes and provide transparency through a privacy notice disclosing the use of AI-scoring.

A hospital collecting patient records cannot supply these records as training data to a commercial AI vendor developing a diagnostic tool for commercial licensing without further assessment and legal authority.

Other guidelines also limit the length of time entities may hold on to users’ personal data used to train AI models, mandate data minimisation, accuracy, anonymisation, security and users’ consent.

On the other hand the scope of the guidelines could present an administrative challenge for the ODPC to regulate compliance.

Ride-hailing drivers and restaurants that use food delivery apps, for example, rely on AI models that are developed and deployed outside the country, with the phone apps serving as consumer touchpoints that are location-agnosic.

It is thus difficult to outline how the ODPC would go about enforcing the regulations upon firms that have no physical presence in Kenya and operate beyond the country’s regulatory scope.

Kenyan regulators have in the past struggled to enforce local regulations upon global big tech firms like Google and Facebook that cite their foreign-based offices as falling outside the purview of legislation covering Kenyan corporates.

At the same time the nature of AI deployment where companies purchase subscriptions to enterprise language learning models presents a regulatory headache for the ODPC.

There are hundreds of proprietary language learning models and thousands more on open source platforms like Hugging Face. It thus presents a regulatory dilemma for the ODPC to monitor compliance across such a large range of products and often, problematic LLM deployment will not be identified until consumers raise the flag and by that time the damage has already been done.

Nevertheless the release of the guidance note is a step in the right direction in the country’s attempt at regulating an industry that is disruptive globally and one that many governments are just starting to understand.

It further enshrines the right of Kenyan digital users such as informed consent, access to personal data collected by private companies and rights to have their data corrected and erased.

It is further an advancement of Kenya’s data protection regulation that is among the most robust in the region and sets the country ahead of regional peers in enforcing data governance at a time the industry is progressing at breakneck speed.

To ensure successful implementation, the ODPC will have to work together with entities in the private and public sector to ensure effective adoption.

The regulator will also have to reach out to other state regulators and government bodies to ensure an umbrella approach to enforcement of the guidelines. Just like laws on ethical corporate governance and investor protection are enforced by more than one regulator, regulations on appropriate AI deployment will require a multi-sectoral approach to work effectively in safeguarding the personal data rights of Kenyan consumers.

Former Principal Secretary Esther Koimett has emerged as the largest shareholder in Middle East Bank Kenya following a multi-billion shilling wealth transfer from her late father, Nicholas Biwott.

Regulatory disclosures from the bank show that Ms Koimett holds a 17.48 percent stake, making her the single-largest investor in the institution, which has roots in Dubai and was initially owned by the Al-Futtaim Group, associated with Carrefour supermarkets.

The shareholding places her at the centre of strategic decision-making in the bank, where she joined the board on February 26, 2024.

The investment cements Ms Koimett’s activities in Kenya’s private sector after nearly three decades of public service, including as PS in several ministries and CEO of Kenya Post Office Savings Bank.

It’s unclear when she acquired the top stake in the bank that Al-Futtaim Group established in August 1981, before the UAE-based conglomerate ceded ownership to locals in the early 1990s.

Ms Koimett did not respond to phone calls and text message seeking comment.

Previous reports linked her late billionaire father, Mr Biwott, to a stake in the bank amid talk that the powerful Cabinet minister in the Moi era acquired the ownership following Al-Futtaim’s exit in April 1991.

The exit of Al-Futtaim was touted as an attempt to “Kenyanise” the bank’s ownership structure. Mr Biwott succumbed to kidney failure on July 11, 2017 at the age of 77.

Mr Biwott succumbed to kidney failure on July 11, 2017 at the age of 77. Mr Biwott entered politics in 1974 – almost 10 years after Kenya gained independence from British rule – and later became personal assistant to President Daniel arap Moi when he was vice-president. Mr Moi died in 2002.

While in government, Mr Biwott built massive wealth spread across industries, which was recently passed to his heirs. He bequeathed to each of his children, including Ms Koimett, from the four wives an equal one-fourteenth share of his estate.

Other top owners of Middle East Bank Kenya are MEB Holdings (11.58 percent), Mustang Limited (10.47 percent), Baumann Management Services Limited and Good Fortune Limited, which hold 6.6 percent stake each.

The bank’s ownership structure reflects a predominantly local investor base. Disclosures indicate that local shareholders account for 90.22 percent of ownership while foreign investors hold 9.78 percent.

Ms Koimett is among the 20 individuals who hold a 20.31 percent stake in the bank that is 79.69 percent owned by 21 corporate shareholders.

Her 17.48 percent holding means the remaining 19 individuals in the lender own 2.83 percent.

Middle East Bank Kenya posted a net profit of Sh264.37 million in the year ended December 2025, marking a 22.2 percent rise from Sh216.34 million. In the first quarter ended March this year, net earnings rose 16.9 percent to Sh35.29 million.

Ms Koimett’s ownership in Middle East Bank emerges in a period when local banks have become a target for large African lenders seeking buyout deals for expansion into Kenya and to use the country as a launch pad into the East African market.

Kenya’s appeal lies in its gateway role to the East African Community, a fast growing bloc expanding by at least 5.0 percent a year.

This has placed the owners of local banks on the cusp of making outsized capital gains as big African banks buy them out for a piece of Kenya’s crowded banking sector.

Ms Koimett’s stake and directorship in Middle East Bank Kenya cements her boardroom dealings in corporate Kenya. She is currently the chairperson of M-Pesa Holdings Company and AAR Insurance Kenya, and also sits on the boards of Kenya Airways, Car and General and the African Trade and Investment Development Insurance.

Her career as head Kenya Post Office Savings Bank, Permanent Secretary in the Ministry of Tourism and Information and investment secretary at the Treasury earned her the moniker: the iron lady of Kenya’s public service.

Middle East Bank Kenya was one of the 10 banks that raced to increase their capital last year in response to the decision by the Central Bank of Kenya (CBK) to raise the minimum capital from Sh1 billion to Sh3 billion by last December.

Six of the 10 lenders, including M-Oriental Bank, Africa Banking Corporation (ABC), Middle East Bank of Kenya, CIB Kenya, Premier Bank and UBA Kenya, raised their core capital above Sh3 billion by the end of March this year.

Middle East Bank Kenya’s core capital rose to Sh3.07 billion at the end of December 2025 from Sh2.11 billion in September.

The CBK proposes to raise the capital to Sh10 billion by 2032 in what is expected to spur further consolidation in Kenya, which also ?appeals as a hub for travel and regional bank headquarters. Relatively solid financial regulation, easy repatriation of dividends and the freely traded shilling add to the attraction.

African banks have been busy dealmaking as global giants such as Standard Chartered and Societe Generale exit smaller markets to focus on core ones such as Kenya, while a growing need to invest in technology has prompted deals to gain scale.

Nigeria’s Access bought National Bank of Kenya from KCB Group in a deal that was completed halfway through last year.

South Africa’s slow growth and mature sector are pushing its biggest banks to expand elsewhere.

Nedbank agreed earlier this year to acquire a majority stake in Kenya’s NCBA as part of its regional expansion, beating South African rival Standard Bank, which operates in Kenya as Stanbic, to the prize.

South Africa’s Absa group is also increasing its stake in its Kenya subsidiary from 68.5 percent to 85 percent in a Sh31 billion deal.

Kenya’s big banks command market shares in the low-to-mid teens, while second-tier lenders, such as Family Bank, are typically in the high single digits. There is also a long tail of smaller banks, including Middle East Bank of Kenya.