Economy

Appointment of tax tribunal staff to be staggered

tax

Kenya Revenue Authority (KRA) headquarters, Times Towers, in Nairobi. PHOTO | SALATON NJAU

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Summary

  • This follows the coming into force of the Tax Appeals Tribunal Amendment Act, 2022 which also shifted appointment powers from the National Treasury to the JSC.
  • The changes are aimed at stemming grounding operations of the tribunal due to the expiry of contracts for members that in 2018 delayed the hearing of cases for over a year.
  • The Tax Appeals Tribunal (TAT) handles disputes pitting the KRA and taxpayers and is traditionally the first course of action for tax cases.

The Judicial Service Commission (JSC) will appoint members to the Tax Appeals Tribunal on a staggered basis in legal changes meant to avoid the lack of quorum that has in the past derailed hearing of tax disputes.

This follows the coming into force of the Tax Appeals Tribunal Amendment Act, 2022 which also shifted appointment powers from the National Treasury to the JSC.

The changes are aimed at stemming grounding operations of the tribunal due to the expiry of contracts for members that in 2018 delayed the hearing of cases for over a year hurting businesses and revenue collection by the Kenya Revenue Authority (KRA).

The Tax Appeals Tribunal (TAT) handles disputes pitting the KRA and taxpayers and is traditionally the first course of action for tax cases.

“The Commission (JSC) shall appoint the members of the Tribunal in a staggered manner so as to ensure that, at all times, at least one-third of the members are in office,” reads the Tax Appeals Tribunal Amendment Act, 2022.

Operations at the tribunal were in 2018 grounded after the contracts of members expired with the then Treasury secretary Henry Rotich delaying naming the new team for nearly a year until April 2019.

The delays have in the past hurt businesses seeking review of tax demands.

TAT heard and resolved 1,127 tax disputes for the financial year ended June 2021, a jump of 78.89 percent compared with 630 cases a year earlier pointing to its impact in resolving tax disputes that have in the past led to the closure of businesses.

The legal changes that took effect on March 21 also increased the number of High Court advocates sitting on the tribunal to up to nine from the previous limit of five.

The tribunal will also sit on a full-time basis marking a shift from the past where it held hearings on part-time leading to the piling up of unresolved cases that have in turn delayed the collection of taxes by the KRA.

“The Chairperson or a member of the Tribunal shall serve on a full-time basis,” reads the Amended Act.

The tribunal will also report to the JSC ending nearly a decade where it had been reporting to the Secretary of the National Treasury.

Chief Registrar of the Judiciary Anne Amadi had petitioned lawmakers to increase its independence and free the tribunal from the Executive amid a push by the KRA to retain the appointment powers with the National Treasury.

TAT was rolled out in 2013 as part of business reforms aimed at boosting the investment climate by offering businesses an avenue to appeal tax demands from the KRA.

The tax arbitration process was previously governed by various tax statutes with resultant tribunals being funded by the KRA, raising the perception of a lack of independence.

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