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The Absa tax refund fight has gone the bank’s way. The Tax Appeals Tribunal has ordered the Kenya Revenue Authority (KRA) to repay Absa Bank Kenya KSh317,268,339 in withholding tax that the lender paid in 2020 on fees linked to Visa, Mastercard and American Express card payments.
In a judgment delivered on 6 November 2026 in Appeal E705 of 2026, a four-member panel chaired by Robert Mutuma set aside KRA’s decision of 21 April 2026 that had rejected the refund. KRA has 60 days from the judgment to pay, which runs to about 5 January 2027.
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How the Absa tax refund dispute started
The case goes back to an audit of the bank, then Barclays Bank of Kenya, for the years 2007 to 2010. KRA treated payments to card companies as royalties and interchange fees paid to card-issuing banks as management or professional fees, both subject to withholding tax.
| Item in KRA’s November 2020 demand | Amount |
|---|---|
| Principal tax | KSh317,268,338 |
| Penalties | KSh31,726,834 |
| Interest | KSh277,002,290 |
| Total | KSh625,997,462 |
The High Court quashed the assessments in May 2015, but the Court of Appeal reversed that on 6 November 2020. With no stay in place, KRA demanded the full amount on 18 November 2020, and the bank paid KSh317,268,339 on 2 December 2020 while it appealed to the Supreme Court.
On 5 December 2025, the Supreme Court ruled that fees paid by an acquiring bank to card companies are not royalties, and interchange fees are not management or professional fees, so neither attracts withholding tax under the Income Tax Act.
Why KRA refused to pay
Absa applied for the refund on 26 February 2026 under section 47 of the Tax Procedures Act. KRA said no, telling the bank that “the judgment of the Supreme Court applies prospectively from its date of delivery”, because the money was collected when the Court of Appeal decision stood. KRA also argued the claim was time-barred, since the law gives taxpayers five years from the date of payment to seek a refund of overpaid income tax.
What the tribunal decided
The tribunal rejected both arguments. It said a court interpreting a law “does not legislate” but declares what the law has always meant, and that the Supreme Court would have had to say so expressly if it wanted its ruling to apply only to the future.
The panel also pointed to KRA’s own conduct. In consent orders dated 28 and 30 April 2026 in two High Court tax appeals, KRA revised to nil withholding tax assessments of KSh414,891,014 for January 2021 to December 2022 and KSh1,108,302,922 for January 2017 to December 2020. Both periods came before the Supreme Court ruling.
On time limits, the tribunal held that the payment only became “overpaid tax” on 5 December 2025, when the Supreme Court set aside the Court of Appeal judgment, so the five-year clock started then. The tribunal declined Absa’s request for interest from that date and ordered each side to bear its own costs.
What the Absa tax refund means for banks
The tribunal noted that, according to KRA’s own submission before the Supreme Court, Absa “and other banks” paid the disputed tax after the 2020 Court of Appeal ruling. The decision gives other lenders a clear basis for similar refund claims, although the judgment can still be challenged on appeal.
For context on how much banks pay in tax, see our report on the record KSh205.6bn banks’ tax contribution. Investors following the lender can check Absa Kenya dividend history and its current leadership team. Taxpayers in their own disputes can read our guides on how to object to a KRA assessment and how to apply for a KRA tax refund.
Frequently asked questions
How much must KRA refund Absa?
KSh317,268,339, the amount Absa paid on 2 December 2020 after the Court of Appeal ruling. KRA has 60 days from the 6 November 2026 judgment to pay.
Why did KRA reject the Absa tax refund?
KRA argued the Supreme Court ruling of 5 December 2025 applied only to the future and that the claim was filed outside the five-year refund window.
Did Absa get interest on the refund?
No. The tribunal declined the request for interest from 5 December 2025, saying no provision of the Tax Procedures Act allowed it, and each side will bear its own costs.
Which fees were in dispute?
Payments to Visa, Mastercard and American Express, which KRA treated as royalties, and interchange fees paid to card-issuing banks, which it treated as management or professional fees.
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