THE LITERAL INTERPRETATION RULE IN TAX STATUTES: THE BARCLAYS AND THE COMMISSIONER OF DOMESTIC TAXES CASES

Abdullahi Ali

Abstract

Traditionally, tax statutes have been interpreted in a literal and strict manner. Proponents of the literal interpretation of tax statutes approach (also
referred to as the ‘traditional approach’) have in principle carried sway for the
basic reason that the punitive nature of a tax law demands that the taxpayer
ought to know in unambiguous and clear terms whether and how exactly
they are liable for tax. This issue was addressed by the High Court and the
Court of Appeal in the cases between Barclays Bank of Kenya Limited and
the Kenya Revenue Authority’s Commissioner of Domestic Taxes. This case
review assesses these cases and the impact of the resulting jurisprudence
on the interpretation of tax statues in Kenya.