Kenya: Application of commercial building allowance for years before 2010

The High Court clarified application of the commercial building allowance for years prior to 2010

The High Court clarified application of the commercial building allowance

The High Court (affirming a lower tribunal decision) clarified application of the commercial building allowance for years prior to 2010.

The case is: Commissioner of Domestic Taxes v. Sony Holdings Ltd, Case No. HCCOMMITA/E052/2020 KLR.


The taxpayer completed construction of a shopping mall and commissioned it in 2007.

In May 2016, the taxpayer applied to the tax authority to amend its returns for 2010 to 2015 to include a deduction under the commercial building allowance (allowed at a rate of 25% per year). The tax authority, however, rejected this application on the grounds that the shopping mall was completed and placed in service in 2007—before the effective date (1 January 2010) of the law allowing taxpayers to claim the commercial building allowance.

The taxpayer objected and sought review by the Tax Appeal Tribunal which held that the tax authority erred in concluding that the allowance only applied to “buildings that were completed and put to use on or after 1st January 2010” whereas the statutory provision applied to any claim made “for any year of income commencing on or after 1st January 2010.”

The tax authority appealed the tribunal’s decision, and the High Court affirmed.

The High Court’s judgment clarifies application of the commercial building allowance for the periods prior to 1 January 2010. According to the High Court, taxpayers are entitled to the allowance for commercial buildings that were completed before 2010—subject to fulfilling the conditions that prevailed at that time. 

KPMG observation

Tax professionals anticipate that the decision could provide opportunities for taxpayers—especially when assessments made by the tax authority were based on the belief that the allowance was only available after 2010. Taxpayers with no pre-existing assessments need to be aware of the five-year period to amend their returns and to claim the benefit of the allowance.

Read an April 2021 report [PDF 89 KB] prepared by the KPMG member firm in Kenya



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