The Kenya Revenue Authority (KRA) resolved 319 cases referred to arbitration in the first half of the current financial year ending June, as the taxman opts for out-of-court settlements.
The taxman said this represents 57 percent of the cases referred to arbitration in the first half of the current financial year ending compared with 49.29 percent in the previous period.
Paul Matuku, the Commissioner for Legal Services at KRA, said 319 out 559 cases that went through the Times Tower-led Alternative Tax Dispute Resolution (ADR) process were resolved compared with 243 out of 493 cases settled last year.
The taxman says ADR recorded an 11 percent growth in revenue during the first half of 2021/2022, unlocking Sh10.4 billion compared to Sh9.4 billion collected during a similar period in 2020/2021.
“The growth in the number of applications to ADR confirms the growth in the number of taxpayers who are increasingly embracing ADR in preference to other dispute resolution mechanisms such as litigation processes,” Mr Matuku said in a statement.
Kenya ushered in the ADR mechanism regime in April 2015 as a way to fast-track the resolution of cases for taxpayers who disagree with the tax bills slapped on them.
The 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 onto the courts.
The tax arbitration process, however, locks out cases that are criminal in nature such as tax evasion, malpractices and fraud.
KRA says the cases resolved in the July-December 2021 took an average of 42 days to conclude, less than half the legal threshold.
Some Sh31.4 billion were recovered from ADR cases concluded last financial year, a sharp jump from Sh9.8 billion the year before, KRA had said in an earlier interview.
“The ADR process is more flexible, cost-efficient, confidential and time-saving. The process also provides the parties with more control over the procedures for resolving the disputes and the results,” the KRA chief legal officer said in Monday’s statement.
Before the implementation of the ADR process, which is handled within the KRA, taxpayers aggrieved with tax assessments appealed to the Tax Appeals Tribunal which came to force in 2013 before escalating to the High Court if not satisfied.