⚖️ Kenyan Legal Framework & Case Law on remittance of withheld tax by an appointed agent

Scenario: Here’s what Kenyan case law and KRA practice say about whether a tenant (payor) is liable for withholding tax when the landlord’s tax agent fails to remit to KRA:

⚖️ Kenyan Legal Framework & Case Law

A. Commissioner of Domestic Taxes v Githima Ltd (Income Tax Appeal E047 of 2022, 2023 KEHC 26190)

• Equity Bank withheld VAT on behalf of its landlord but failed to remit the full amount to KRA.
• The High Court clarified that withholding agents remain liable for remittance under Section 42A(4B) of the Income Tax Act—failure to remit by the statutory deadline constitutes an offence (Full Case).
• Importantly, even though the tenant deducted the tax, the liability to ensure proper remittance lies with the tenant as the appointed agent.
• Also, the landlord cannot be held liable merely because the agent withheld but did not remit.

B. Dianga v Commissioner of Domestic Taxes (Tax Appeal Tribunal, 2023 KETAT 508)

• Equity Bank deducted VAT but was later compelled to remit and register the landlord for VAT.
• The Tribunal reaffirmed that deduction alone is insufficient—without remittance, the withholding agent (tenant) cannot discharge its obligation (Read More).

 

🧾 Statutory Position

• Section 42A(1–4B) (Income Tax Act / TPA): once appointed, the agent must deduct and remit within five working days. Failure to do so is an offence, and liability remains with the agent—not the landlord .
• A deduction by itself does not satisfy the obligation: proof of remittance is essential.

 

✍️ Implications

1.      Tenant liability: If appointed as withholding agent, the tenant is legally responsible for any failure to remit tax after deduction.

2.      Recovery from tenant: KRA can pursue the tenant directly for unpaid withholding (e.g., VAT or income tax on rent), regardless of any internal arrangement with the landlord.

3.      Tenant defences: Without credible evidence of remittance (e.g., KRA receipts, iTax confirmations), the tenant cannot use their deduction as a defence.

4.      Landlord protection: A tenant's failure to remit does not shift liability to the landlord; the tenant remains the one in breach.

 

✅ Conclusion

Yes—the tenant is primarily liable for any non-remitted withheld tax once they deduct it as an appointed agent.
The tenant’s obligation is deduct → remit (within statutory time). Failure to remit constitutes an offence and leads to direct liability under Kenyan tax law.
The landlord may claim credit or proof of remittance, but it is not their burden to make KRA whole for the tenant’s default.