Increased adoption of out-of-court options has seen the Kenya Revenue Authority (KRA) amicably resolve tax disputes with 181 companies, earning the public coffers Sh8.3 billion.
KRA Commissioner for Legal Services and Board Coordination Wairimu Ng'ang'a said on Tuesday that the tax disputes handled in the past three years also saved companies and taxpayers a lot of money that would normally have been spent in litigation.
“It provides an environment where tax disputes are amicably resolved without recourse to lengthy and costly litigation. The process is confidential, without prejudice, voluntary and non-adversarial,” she said.
KRA, she added, had revamped the Alternative Dispute Resolution (ADR) function where expert facilitators had been hired to mediate disputes between taxpayers and various revenue departments.
Speaking in Nairobi, Ms Ng’ang’a said companies or individual taxpayers choosing ADR will have an independent review of a tax assessment conducted on their accounts.
The taxpayer will be at liberty to challenge the outcome in a fair hearing without prejudicing their rights to challenge a tax assessment and get a fair hearing.
Ms Ng’ang’a said the ADR framework provides general guidelines facilitating engagement between parties.
“ADR is legally provided for in Article 159 (2)(c) of the Constitution as well as in other tax legislations. The Tax Procedures Act under Section 55 (1) allows parties, to a tax dispute, 90 days to resolve a matter while the Tax Appeals Tribunal Act, in Section 28(1), allows parties to a tax dispute to request to resolve a tax dispute, outside the tribunal, at any stage of the proceedings,” she observed.
The commissioner added that nearly all tax disputes were open to ADR except in instances where a tax dispute requires interpretation of the law, a judgement or ruling had been made in a matter and where either party was not willing to engage in the ADR mechanism.
Agree to terms
Ms Ng’ang’a said parties only engaged in arbitration where both were agreeable to ADR terms.
In any ADR sitting, a taxpayer and a KRA representative must be present where an objection is filed disputing a tax assessment.
Upon review and eventual consent by both parties, an agreement is registered with the taxpayer settling the agreed tax amount