Savings and credit cooperatives have joined a growing list of opponents pushing back against a proposal that would allow the Kenya Revenue Authority to recover taxes from bank accounts even while those tax demands are being contested.
The Kenya Union of Savings and Credit Cooperatives (KUSCCO) appeared before the National Assembly on Wednesday, urging lawmakers to reject the provision in the Finance Bill 2026 that would amend the Tax Procedures Act to give KRA that power.
At the heart of the dispute is Section 42(14) (e) of the Tax Procedures Act, which currently bars KRA from issuing agency notices, freezing accounts, seizing assets, or taking any other enforcement action while a tax appeal is still pending. The Finance Bill 2026 proposes to remove that protection.
KUSCCO argues that the change would expose SACCOs — whose pooled member funds are in constant use for loans, withdrawals, and daily operations — to severe disruption if KRA could freeze or draw down those accounts mid-dispute.
“Funds held in SACCO accounts are not idle reserves but are deployed to support lending, member withdrawals and ongoing financial obligations,” the union said. “The issuing of agency notices against such funds can disrupt lending and delay access to member savings.”
Beyond the operational risk, KUSCCO warns the proposal would undermine the right to a fair appeal. Taxpayers facing enforcement action during a dispute may be forced to abandon legitimate cases simply because they cannot absorb the financial pressure, the union said, arguing that tax disputes should be resolved on their merits rather than by financial attrition.
KUSCCO is asking Parliament to retain the existing safeguards and reject the deletion of Section 42(14) (e) until all disputes and appeals have been fully resolved.
KUSCCO’s Key Proposals on Finance Bill 2026
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Retain Section 42(14)(e) — Keep the provision barring KRA from issuing agency notices, freezing accounts, seizing assets, or taking enforcement action while a tax dispute or appeal is pending.
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Reject KRA’s power over disputed funds — KRA should not recover contested taxes before appeals are concluded. Taxpayers must not be forced to pay disputed demands before their cases are heard.
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Protect SACCO liquidity — Member funds are actively deployed for loans, withdrawals, and daily operations. Freezing them mid-dispute would disrupt operations and limit members’ access to savings.
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Safeguard the right of appeal — Early enforcement could pressure taxpayers into abandoning legitimate cases due to financial strain. Disputes should be resolved on merit, not financial muscle.
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Avoid business disruption — Agency notices during disputes would restrict working capital, reduce liquidity, disrupt lending, and undermine financial stability across SACCOs and other institutions.
