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Economy

Paralysis at KRA dispute unit cut taxes by Sh2.9bn

Kenya Revenue Authority
Kenya Revenue Authority headquarters in Nairobi. FILE PHOTO | NMG 

Tax revenue recovered from settling disputes with firms and individuals outside court fell Sh2.9 billion or 96 per cent in the year to June amid lack of quorum at the appeals tribunal to hear the cases.

The Kenya Revenue Authority (KRA) recovered Sh94 million from Tax Dispute Resolution (TDR) processes, an analysis of revenue data shows, a sharp drop from Sh3.01 billion a year earlier.

Cases businesses and individuals aggrieved by KRA tax demands filed at the Tax Appeals Tribunal were not resolved during the 12 months through June 2019 after the term of its members expired in April 2018.

That left Alternative Dispute Resolution (ADR) mechanism within the KRA as the only appeals channel for taxpayers who disagree with the tax bills slapped on them by the taxman, before escalating the disputes to the High Court.

Suspended Treasury secretary Henry Rotich only gazetted members of the independent tribunal in April, 12 months after the previous team exited leaving only the chairman in office and effectively paralysing proceedings. The new members of the tribunal were sworn in by Judiciary Chief Registrar Anne Amadi early June.

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Kenya ushered in the dispute resolution mechanism regime in April 2015 after the Tax Appeals Tribunal Act, 2013 was enforced as part of business reforms aimed at boosting the investment climate.

The process was previously governed by various tax statutes with resultant tribunals being funded by the KRA, thus largely seen as lacking independence.

KRA commissioner-general James Mburu says some 237 cases were resolved under the TDR mechanism in four years through June 2019, leading to the recovery of Sh8.102 billion in revenue.

“KRA has been working on the consolidation of Tax Dispute Resolution. This was finally achieved last year with the establishment of a dedicated TDR programme,” Mr Mburu says.

“The programme will enhance efficiency, professionalism and provide a holistic view of tax disputes.”

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