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Kenya’s tax agency records 100pc growth in levy dispute resolution

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Kenya Revenue Authority’s (KRA) Alternative Disputes Resolution (ADR) is on a positive trajectory after recording a 100% growth on number of cases resolved in the first quarter of the 2020/2021 Financial Year. The Authority successfully resolved 118 tax cases in the first quarter of 2020/2021 Financial Year, compared to 59 cases during the same period last year.

This not only represents an excellent performance but also confirms that taxpayers have embraced ADR as opposed to other dispute resolution mechanism such as litigation processes. KRA received 408 disputes between the months of March to September 2020 at ADR, compared to 310 cases that were received during the same period in the year 2019.

During the same period (first quarter year 2020/2021), the average number of days taken to resolve tax disputes was 23 days. This cannot be compared with the number of years it takes to resolve a dispute in an adversarial process.

The Tax Procedures Act provides that disputes under the ADR framework should be resolved within 90 days. This provision ensures that disputes are not dragged or protracted and although the provision is for 90 days, resolution of cases can be achieved in a much shorter time span as witnessed during the same period.

Unlike other dispute resolution mechanisms such as litigation, ADR does not require payment of hefty legal fees and Court filing fees. In addition, due to the fact that ADR is a mediation led process, a taxpayer does not require the presence of an Advocate during negotiations and a taxpayer can represent himself.

ADR also preserves the relationship between the taxpayer and the tax agency. Due to the nature of the ADR process, parties remain cordial and not antagonized. This is because of the win-win outcome that ADR framework provides. A good example of this is when a taxpayer, in a case where taxes are found to be payable after an ADR process, is allowed a payment plan that is accommodative to their cash flow. ADR process has been advantageous to KRA as it has enabled it realise early release of revenue to support the Government Development Agenda.

Despite living in a Covid-19 for most of the third and fourth quarter of the last financial year and the first quarter of the current Financial Year, resolution of disputes via ADR has remained unhampered. This is due to business continuity measures put in place by the Authority.

ADR sessions are now conducted online; a move which has been well received by taxpayers and seen an increase in the number of disputes being filed. In the period of March –September 2019, 310 cases had been received at ADR compared to 408 disputes for the same period in the 2020.

KRA adopted new age dispute resolution in its tax disputes through the establishment of the Alternative Disputes Resolution (ADR) Division. The Division which was formed in the year 2015 has grown in leaps and bounds if the number of the tax disputes successfully facilitated between KRA and taxpayers in an efficient effective, timely manner and with finality is to go by.

A successful dispute resolution system should be efficient, effective, timely and final. A system which is devoid of this is sure to frustrate and aggravate the dispute even further. New age dispute resolution mechanism is about moving away from conventional combative and confrontational practices to having a win-win outcome for concerned parties.

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