In an increasingly complex tax environment, it is crucial for taxpayers to understand the avenues available to resolve disputes with the Kenya Revenue Authority (KRA).
The tax dispute resolution framework in Kenya is structured to ensure fairness, efficiency, and adherence to the rule of law, with provisions anchored in the Tax Procedures Act (TPA) and supported by administrative and judicial mechanisms.
Sticking to statutory timelines is key to ensure that your disputes are resolved effectively.
Disputes typically arise when there is a disagreement between the taxpayer’s self-assessment and the KRA's assessment. Upon receiving an assessment or enforcement notice, a taxpayer has the right to contest the decision by lodging an objection under Section 51 of the TPA.
This objection must be filed within 30 days. The objection contains detailed statement of the grounds of objection.
Once an objection is filed, the Commissioner is required to issue an objection decision within 60 days.
Failure to do so results in the objection being deemed allowed by default, an important safeguard for taxpayers. If the taxpayer is dissatisfied with the decision, the next step is to seek redress through quasi-judicial and judicial mechanisms.
A Notice of Appeal to the Tax Appeals Tribunal must be filed within 30 days of receiving the Objection Decision from the Commissioner.
Following this, the taxpayer is required to submit a Memorandum of Appeal and a Statement of Facts within 14 days of filing the Notice of Appeal. The Memorandum of Appeal outlines the grounds of appeal, while the Statement of Facts provides a detailed explanation of the factual background supporting those grounds.
After filing these documents, the taxpayer may opt to pursue resolution of the dispute through litigation or the Alternative Dispute Resolution (ADR), a mechanism provided under Section 55 of the TPA.
The ADR process takes 120 days and offers a collaborative platform for taxpayers and the KRA to resolve disputes amicably without resorting to formal litigation. It is cost-effective, confidential, and time-saving. The outcome is binding once formalised, and parties are expected to abide by the terms agreed upon.
Once an ADR agreement is reached, tax payers then record a consent at the Tax Appeals Tribunal, which marks the dispute as closed.
Where ADR fails or is not pursued, the taxpayer may appeal to the Tax Appeals Tribunal within 30 days of receiving the objection decision.
The Tribunal is an independent body established under the Tax Appeals Tribunal Act. It reviews matters of fact and law and has jurisdiction over disputes involving income tax, VAT, customs, and excise duties. Proceedings at the Tribunal are less formal than in court, yet decisions are binding and enforceable.
If dissatisfied with the Tribunal’s decision, a taxpayer may appeal to the High Court on matters of law. This must be done within 30 days of the Tribunal's ruling. Further appeals may be taken to the Court of Appeal and subsequently to the Supreme Court, but only on issues involving constitutional interpretation or matters of general public importance.
The multi-tiered dispute resolution process underscores the government's commitment to upholding taxpayers’ rights while protecting public revenue.
However, challenges such as delayed decisions, backlog of cases, and procedural rigidity at times undermine the system's efficiency. The increasing uptake of ADR is a testament to the need for more flexible and collaborative mechanisms.
The writer is a tax lawyer and an advocate of the High Court of Kenya
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