Tax Appeals Tribunal Kenya: Objecting to and Appealing a KRA Tax Decision

A Kenya Revenue Authority (KRA) assessment is not the final word on what a taxpayer owes. The Tax Procedures Act and the Tax Appeals Tribunal Act together set a strict, deadline-driven route for disputing a tax decision: an objection to KRA, an appeal to the Tax Appeals Tribunal Kenya has established for that purpose, and then the courts on points of law. Missing a deadline can end the right to challenge an assessment, so the sequence matters.

Step One: The Notice of Objection

Under section 51(1) of the Tax Procedures Act (Cap. 469B), a taxpayer who wishes to dispute a tax decision must first lodge an objection before proceeding under any other law. Section 51(2) allows the notice of objection to be lodged in writing with the Commissioner within thirty days of being notified of the decision.

Section 51(3) treats a notice as validly lodged if:

• it states precisely the grounds of objection, the amendments required to correct the decision and the reasons for them;
• for an assessment, the taxpayer has paid the entire tax not in dispute or has applied for an extension of time to pay it under section 33(1); and
• all relevant documents have been submitted.

If the Commissioner decides the notice is not valid, he must notify the taxpayer within fourteen days and ask for the missing information within seven days (section 51(4)). If the taxpayer fails to supply it, the Commissioner may decide the objection within sixty days of lodgement (section 51(4A)). Where the decision is an amended assessment, the taxpayer may object only to the alterations and additions made (section 51(5)).

Late Objections

A taxpayer who misses the thirty days may apply in writing for an extension of time (section 51(6)). The Commissioner may allow it if the taxpayer was prevented by absence from Kenya, sickness or other reasonable cause and did not unreasonably delay (section 51(7)), and must notify the decision within fourteen days of the application (section 51(7A)).

Step Two: KRA’s Objection Decision

The Commissioner must make the objection decision within sixty days of receiving a valid notice of objection, failing which the objection is deemed allowed (section 51(11)). The decision may allow the objection in whole or in part, or disallow it, and must include a statement of findings on the material facts and the reasons (section 51(8) and (10)). Because correspondence is often issued through the iTax portal, a taxpayer should monitor the portal throughout the sixty days.

Step Three: Appeal to the Tax Appeals Tribunal

A taxpayer dissatisfied with the objection decision may appeal to the Tribunal within thirty days of being notified (section 51(12)), in accordance with the Tax Appeals Tribunal Act (section 52(1)). For an assessment, the notice of appeal is valid only if the taxpayer has paid the tax not in dispute or has entered into an arrangement with the Commissioner to pay it (section 52(2)).

Section 13 of the Tax Appeals Tribunal Act (Cap. 469A) sets the procedure:

• the notice of appeal is submitted within thirty days of receiving the Commissioner’s decision;
• within fourteen days of filing the notice, the appellant submits a memorandum of appeal, statements of facts, the appealable decision and other necessary documents;
• the appellant serves a copy of the appeal on the Commissioner within two days of giving notice of appeal;
• the Tribunal may extend time for absence from Kenya, sickness or other reasonable cause; and
• the Tribunal must hear and determine the appeal within ninety days of filing, extendable by not more than thirty days by a resolution of at least half its members.

Under section 15, the Commissioner then has thirty days from service to submit a statement of facts, including the reasons for the tax decision, and any other documents needed for the review. Proceedings are exempt from the Civil Procedure Act (section 14).

Grounds, Burden of Proof and Further Appeals

Section 56 of the Tax Procedures Act contains three rules that decide many cases. The burden is on the taxpayer to prove that a tax decision is incorrect. An appeal to the High Court or Court of Appeal lies on a question of law only. And on any appeal, the taxpayer may rely only on the grounds stated in the original objection unless the Tribunal or court allows new grounds. A thin objection can therefore permanently limit the arguments available later.

A party dissatisfied with the Tribunal’s decision may appeal to the High Court within thirty days of being notified, or within such further period as the High Court allows (section 53). Section 54 provides for a further appeal to the Court of Appeal.

Settling Out of Court or Tribunal

Where a court or the Tribunal permits the parties to settle, the settlement must be concluded within one hundred and twenty days, failing which the dispute is referred back to the body that permitted the settlement (section 55 of the Tax Procedures Act). Settlement can be sensible where the dispute turns on valuation or technical interpretation and not on a clear error of law.

Why Taxpayers Lose

The recurring causes are missed deadlines, objections that state conclusions without grounds, incomplete supporting documents, and poor accounting records that make it impossible to reconcile the taxpayer’s figures against KRA’s. Because of section 56, the quality of the original objection is usually the most important document in the file.