In a game-changer for digital finance, the Supreme Court (Petition No. E014 of 2022, Dec 5, 2025) sided with Absa Bank against KRA, ruling that payments to Visa/MasterCard/AmEx are facilitation fees, not royalties, and interchange fees compensate costs, not professional services, dodging double taxation under the Income Tax Act.

Overturning the Court of Appeal, this clarifies a 2007-2011 audit dispute, curbs potential transaction cost surges, and reinforces statutory precision in taxing payment ecosystems: vital for Kenya's cashless push.

Will this boost banking innovation or reshape KRA audits?