The Kenya Revenue Authority (KRA) recovered Sh86.52 billion from the resolution of tax disputes with companies and individuals in the last financial year ended June 2025, the agency announced on Tuesday.
The money unlocked from alternative dispute resolution and litigation processes represents a jump of 43.08 percent over Sh60.47 billion in the prior year, Commissioner for Legal Services Paul Matuku said, attributing the rise largely to growing acceptance of out-of-court settlements with taxpayers.
Kenya ushered in the tax dispute resolution mechanism regime in April 2015 after the Tax Appeals Tribunal Act, 2013 was enforced as part of business reforms aimed at boosting the country’s investment climate.
The process was previously governed by various tax statutes, with the resultant tribunals being funded by the KRA, thus largely seen as lacking independence.
A total of 3,594 taxpayers (companies and individuals) objected to tax assessments by the KRA in the review year, Mr Matuku said, prompting the agency to undertake a review under the Independent Review of Objections Section.
The KRA did not disclose the total value of taxes that were disputed, only giving the amount which was determined to be due to the taxman following the independent reviews.
The reviews are aimed at preventing the escalation of disputes to litigation processes in courts, which are usually “lengthy and costly to the parties”.
Some 1,152 cases were resolved through its alternative dispute resolution (ADR) mechanism in the review year, yielding Sh18.90 billion.
“This performance demonstrates that taxpayers have embraced the Tax Dispute Resolution programme, particularly ADR, which continues to gain preference as a method for resolving tax disputes. ADR is a less confrontational alternative to the court system,” Mr Matuku wrote in a press statement.
However, more than three-quarters (78 percent), or Sh67.62 billion, was recovered from 2,389 tax cases which were ruled in favour of the KRA after court processes.
The Times Tower-led ADR mechanism is largely seen as the first layer of resolving disputes arising from tax audits before they are escalated to the Tax Appeals Tribunal and the courts.
Section 55 (1) of the Tax Procedures Act provides that tax disputes under the ADR process should be resolved within 90 days.
“Being a voluntary and participatory process, it allows parties not only to choose the forum but also to control the process. It is also less formal than court proceedings, offering greater flexibility,” Mr Matuku said. “In addition, ADR is confidential, cost-effective, and often results in quicker settlements.”
Taxpayers disputing tax bills are required to lodge an appeal to the tribunal within 30 days of receipt of communication from the KRA and should notify the relevant commissioner (domestic or customs).
They should pay a Sh20,000 non-refundable fee, while the tribunal is required to hear and determine the case within three months.
The KRA has in the past come under fire from business leaders who have complained of a tax regime that is largely unpredictable and one that overburdens a few persons and firms in the formal sector with increased taxes.
“Where a taxpayer admits to owing tax but not being able to pay in a lump sum, we have given a payment plan. What we, however, encourage our taxpayers to do is that as we give you a payment plan, as a sign of goodwill, try as best as you can to sustain the payment plan, because when you default, the tendency is to call it all up,” Commissioner for Large and Medium Taxpayers Department Rispah Simiyu said in a past engagement.
