Tax: Kenya
Kenya’s Tax Appeals Tribunal, a specialist tax court, has ordered the Kenya Revenue Authority (KRA), the national tax collector, to refund KSh317 million (about US$2.4 million) of withholding tax to Absa Bank Kenya, a major lender owned by South Africa’s Absa Group, according to Business Daily. The order follows a Supreme Court ruling in December 2025 that fees paid on card payments were not subject to that tax.
Key Facts
—Refund. The Tribunal ordered KRA to refund KSh317 million (about US$2.4 million) to Absa Bank Kenya.
—Tax. The money is withholding tax, a levy deducted at source, that Absa paid on card payment fees in December 2020.
—Basis. The Supreme Court ruled on Friday 5 December 2025 that card fees were not taxable.
—Judgment. The Tribunal gave its judgment in the first week of November 2026; it can still be appealed.
What the Tribunal Ordered
The Tax Appeals Tribunal set aside KRA’s refusal to refund the money and ordered repayment of KSh317 million (about US$2.4 million), according to law firm DLA Piper Africa’s analysis of the judgment dated 6 November 2026. Business Daily, the Nairobi financial newspaper, names the bank as Absa, reports that it has 60 days to be paid and says the Tribunal declined to award interest.
The tax was levied on payments Absa made to card companies and on interchange fees, the charges banks share in each card payment. We convert shillings at KSh129.86 per US$1, the RT rate of 13 November 2026.
How the Dispute Reached This Point
KRA demanded withholding tax on the card payments, and the Court of Appeal, the second-highest court, sided with it in 2020. The bank paid the tax in December 2020, and Business Daily says it did so while pursuing a final appeal.
On 5 December 2025 the Supreme Court, Kenya’s highest court, ruled in a case brought by Barclays Bank of Kenya, now Absa, against the Commissioner for Domestic Taxes, the head of KRA’s domestic tax department. It held that payments to card companies are not royalties and that interchange fees are not management or professional fees, so neither attracts withholding tax.
Why KRA Lost on Timing
Absa asked for a refund in February 2026 and KRA refused, arguing that the Supreme Court ruling looked forward only, that it never expressly ordered repayment, and that the claim was out of time. The Tribunal rejected all three arguments, DLA Piper Africa says.
It held that the five-year limit under the Tax Procedures Act, the law that governs tax administration, runs from when the tax became an overpayment, which it set at 5 December 2025. Absa’s February 2026 application was therefore within time.
What Is Not Known
Whether KRA will appeal is not known, and we have not seen a KRA statement. The written judgment itself was not available to us, so the 60-day deadline and the refusal of interest rest on Business Daily’s report.
What It Means for You
Other banks and card processors that paid the same tax may study the ruling, although each claim turns on its own facts. Our earlier report on Kenya’s tax base and the Absa overhaul give wider context, and the Kenya news page has more.
Frequently Asked Questions
How much must KRA refund Absa Bank Kenya?
The Tax Appeals Tribunal ordered a refund of KSh317 million (about US$2.4 million). Business Daily reports that it declined to award interest.
Why was the tax refunded?
The Supreme Court ruled on 5 December 2025 that card company payments are not royalties and interchange fees are not professional fees. The Tribunal held that the tax therefore became an overpayment.
Can KRA appeal?
DLA Piper Africa says the decision remains open to appeal. We have not seen a statement from KRA on whether it will.
Sources: Kenya Supreme Court, judgment of 5 December 2025, Barclays Bank of Kenya Limited v Commissioner for Domestic Taxes and others; DLA Piper Africa Kenya, analysis of the Tax Appeals Tribunal ruling on tax refunds, November 2026; Business Daily (Nairobi), report on the refund order; exchange rate KSh129.86 per US$1 (RT, 13 November 2026).
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