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'Unrecovered Loan Principal is Not Tax Deductible' - Tribunal Says

• Mar 02, 2026 • Brian Nzomo • The Kenyan Wall Street The Kenyan Wall Street
'Unrecovered Loan Principal is Not Tax Deductible' - Tribunal Rules
The Tax Appeals Tribunal has ruled that microfinance lender, Premier Credit Limited, cannot deduct the principal of unrecovered loans from its taxable income.

Key Takeaways

  • The Tax Appeals Tribunal ruled that the principal of unrecovered loans is not tax-deductible for microfinance lenders.
  • Only interest and fees on loans are considered tax-deductible losses by the tribunal.
  • The ruling clarifies that loan principal is a balance sheet item, not revenue, and its only impact on the income statement is through the generated interest.
  • Premier Credit Limited's attempt to deduct KSh 30 million in written-off loan principal was denied by the tribunal.
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