Hemingways Watamu Limited v Commissioner of Domestic Taxes (KRA)
The bottom line
#Kenya's Court of Appeal refused to pause a tax judgment against Hemingways Watamu because KRA can simply refund the money if the hotel wins its appeal.
What this practically means
#Executive summary
#Key legal issues
#Arguability of the intended appeal on the investment deduction rate (150% vs 100%)
The dispute over whether Hemingways is entitled to a 150% investment deduction under Paragraph 24(1)(f) or 100% under Paragraph 24(1)(e) of the Second Schedule to the Income Tax Act renders the intended appeal arguable and not frivolous.
The court weighed the rival contentions: the applicant relied on the Tribunal's finding of a 150% deduction under Paragraph 24(1)(f), while KRA defended the High Court's finding of 100% under Paragraph 24(1)(e). The court found this a genuine point of contestation sufficient to satisfy the arguability limb of the Rule 5(2)(b) test, without expressing any view on its eventual merits.
Whether refusal of a stay would render the intended appeal nugatory
The nugatory limb failed: no enforcement had been instituted, and KRA's capacity to refund under Section 47 of the Tax Procedures Act meant any success on appeal would not be rendered hollow.
The applicant's deponent conceded no enforcement mechanisms had been instituted and gave unelaborated apprehensions of irreparable harm. The court held that monetary exposure alone does not establish nugatory-ness where the respondent can refund; KRA pointed to the elaborate statutory refund mechanism under Section 47 of the Tax Procedures Act, which the court found meritorious and securing.
Legal principles established
#- An applicant under Rule 5(2)(b) must demonstrate both that the intended appeal is arguable and that, if the orders are declined and the appeal succeeds, the success will be rendered nugatory.
- An arguable appeal need not be one that must succeed; it is one that ought to be fully argued before the Court.
- Whether an appeal will be rendered nugatory depends on whether what is sought to be stayed is reversible, or if not, whether damages will reasonably compensate the aggrieved party.
Court orders
#- 1.The applicant's application dated 16th December 2025 is dismissed
- 2.Costs of the application to the respondent
- On appeal from
- High Court of Kenya at Nairobi (Commercial & Tax Division)
- HC. Tax Case No. E306 of 2024
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Hemingways Watamu Limited v Commissioner of Domestic Taxes (KRA)", Case Analysis (2026). Civil Application No. E755 of 2025. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1733/eng@2026-09-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.