Tax Appeals Process In Kenya:

Ever wondered how disputes between taxpayers and the Kenya Revenue Authority (KRA) are resolved? In this article, we break down the process from the initial audit notice to the final avenues of appeal, outlining each stage of tax dispute resolution under Kenyan law.

1. Notice of Intention to Audit

The process typically begins when KRA identifies discrepancies, variances, or areas of concern in a taxpayer’s returns. In such cases, the Authority issues a Notice of Intention to Audit, highlighting the specific concerns and requesting the taxpayer to furnish them with the relevant information and documentation to reconcile the noted issues.
The taxpayer is required to provide the requested documents within a prescribed period, usually not exceeding thirty (30) days.

2. Submission of Documents by the Taxpayer

Upon receiving the notice, the taxpayer is expected to:

• Acknowledge receipt of the audit notice;
• Clarify the correct tax position by providing reconciliations for the identified discrepancies; and
• Submit supporting documentation.

If additional time is needed, the taxpayer may formally request an extension to collate the necessary records.

3. Letter of Findings

After reviewing the documents submitted, KRA will issue a Letter of Findings, summarizing its preliminary audit conclusions and indicating the tax liability assessed. The taxpayer is given up to thirty (30) days to respond.
Failure to respond within the specified timeframe allows KRA to proceed with a formal assessment based on the findings.

4. Response to the Letter of Findings

The taxpayer may respond with:

• Additional information or clarification;
• Further reconciliations and supporting documents.

If KRA remains unsatisfied with the taxpayer’s explanation, it may proceed to issue a formal Assessment, stipulating the amount of tax due, along with any applicable penalties and interest under the Tax Procedures Act, 2015 (TPA).

5. Letter of Assessment

This document sets out:

• The total tax liability;
• Penalties and interest accrued;
• Payment timelines.

KRA will also advise the taxpayer of their right to object to the assessment under Section 51 of the Tax Procedures Act, within thirty (30) days of the date of the assessment.

6. Notice of Objection

A taxpayer who disputes an assessment must file a Notice of Objection within the 30-day window, specifying:

• The grounds for objection;
• Proposed amendments to the assessment;
• Reasons and supporting evidence.

Importantly, the taxpayer must pay any undisputed tax and may apply for an extension of time if unable to file within the deadline.

7. Objection Decision

Upon receiving the objection, the Commissioner is required to respond within sixty (60) days, either:

• Allowing the objection in whole or in part; or
• Disallowing it entirely.

If no decision is issued within this timeframe, the objection is deemed allowed by law.

8. Appeal to the Tax Appeals Tribunal (TAT)

If dissatisfied with the Commissioner’s decision, the taxpayer may appeal to the Tax Appeals Tribunal within thirty (30) days (Section 52, TPA). Late appeals may be admitted if valid reasons are provided.
To be admitted:

• The taxpayer must pay the requisite filing fees;
• All undisputed tax must be settled.

The Tribunal will hear the matter and deliver a judgment.

9. Application for Alternative Dispute Resolution (ADR)

At any stage before the Tribunal's judgment, the taxpayer may apply for resolution through ADR. If successful, the resulting consent is adopted by the Tribunal and judgment entered accordingly.
If ADR fails, the matter reverts to the Tribunal for determination.

10. Appeal to the High Court

If either party is aggrieved by the Tribunal’s decision, they may appeal to the High Court within thirty (30) days of the decision, pursuant to Section 53 of the TPA.

11. Appeal to the Court of Appeal

A further appeal may be made to the Court of Appeal by either party dissatisfied with the High Court's decision (Section 54).

Applicable Law

• Tax Procedures Act, 2015
• Tax Appeals Tribunal Act, 2013
• Tax Appeals Tribunal (Procedure) Rules, 2015
• Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015

If you require further clarification or assistance in handling tax disputes, our experienced team is ready to help. Feel free to reach out to us via email through info@mutaiadvocatesllp.com or call us directly on +254 799 468 268. We’re here to support you every step of the way.