Project: Blogpost Article
Date of Publication: March 14, 2024
Live project link: Tax Dispute Resolution: Navigating Kenya's 4 Primary Methods (taxaffix.com)
Demystifying the 4 Methods of Tax Dispute Resolution In Kenya
In Kenya, a tax dispute may arise when the Kenya Revenue Authority (KRA) issues an additional tax assessment on your business. This is after an audit or a compliance check. Alternatively, interpreting the facts involved in any dispute, the applicable law, or both can also lead to a tax dispute. During the dispute and tax dispute resolution period, your business may face implications such as operational disruptions, penalties, and interests. Have you ever experienced a tax dispute with KRA?
In this article, we explain how you can utilise the four processes of tax dispute resolution provided by tax law in Kenya. This will help you wriggle out of a tax dispute maze.
1. Internal Review of Objections
A tax dispute arises when a taxpayer lodges an objection to a tax decision made by the Commissioner. According to the Tax Procedures Act, 2015, you must lodge your objection within 30 days of receiving notification of a tax decision. This action should precede any steps outlined in other written laws.
In the notice of objection, you must give reasons explaining your disagreement with the decision.
The internal review of objections process involves an internal dispute resolution mechanism within KRA. However, if you are dissatisfied with the outcome, you can proceed to other levels of resolution.
2. Alternative Dispute Resolution (ADR)
ADR is an additional and/or alternative means that taxpayers can use to resolve tax disputes outside the tax appeal tribunal or the court system. It involves a mediator who facilitates voluntary and participatory discussions between the taxpayer and the Commissioner.
Therefore, ADR seeks to find amicable solutions to disputes without imposing decisions on the parties. The Tax Procedures Act, Section 55, however, requires the parties to reach an agreement within 90 days from the date of settlement approval.
3. Appeal to the Tax Appeals Tribunal (TAT)
Taxpayers can appeal decisions made by the internal review of objections to the TAT. This is if the decisions are unfavourable to them, and after giving a written notice to the Commissioner.
The Tribunal is mandated to hear and decide on an appeal within 90 days from the date the appeal is filed with the Tribunal.
4. Appeal to the Courts of Law
The taxpayer, if dissatisfied with the Tribunal’s decision, can appeal the decision to the High Court. This appeal must occur within 30 days of receiving notification of the Tribunal’s decision. Alternatively, the High Court permits the appeal within any additional period it may specify. The Chief Justice will establish rules for the High Court to hear such appeals.
Moreover, a taxpayer may appeal the decision made by the High Court to the Court of Appeal in the event that they are dissatisfied with the High Court decision.
Nevertheless, it is important to note that any appeal to the decision of the Tribunal to the High Court or to the decision of the High Court to the Court of Appeal shall be on a question of law only.
In conclusion, Kenya’s tax dispute resolution framework combines administrative, quasi-judicial, judicial, and ADR approaches to address tax-related conflicts. Taxpayers can choose the most suitable method based on their specific circumstances. However, note that tax dispute resolution is not merely about settling differences. It is a commitment to fairness, clarity, and collaborative problem-solving.
Taxpayers should seek professional advice and understand tax laws to help prevent or resolve tax disputes.
