- In the course of day-to-day tax administration, rows are inevitable.
- Disagreements occur where a taxpayer disputes a decision reached by the commissioner on a given matter.
- Various legal frameworks have been put in place to settle such rows, including normal litigation and out of court deals.
In the course of day-to-day tax administration, rows are inevitable. Disagreements occur where a taxpayer disputes a decision reached by the commissioner on a given matter.
Various legal frameworks have been put in place to settle such rows, including normal litigation and out of court deals. Given the lengthy procedures characteristic of litigation, there has been a growing shift from the corridors of justice to out-of-court settlements.
The Tax Appeals Tribunal (TAT) is one such out-of-court framework that has continued to gain traction as far as resolution of related disputes is concerned. Its framework, which is premised on the Tax Appeals Tribunal Act, 2013, was established in November, 2013.
Membership includes among others, tax experts such as retired KRA officials, business persons who understand tax processes and lawyers. Since coming into effect, TAT has been a handy tool for both Kenya Revenue Authority (KRA) and taxpayers as it has enhanced efficiency in resolution of tax disputes.
TAT has undergone various enhancements to bolster its efficiency and capacity in management of tax rows. The most recent, which took effect in January this year, is deployment of members on a full time basis. Previously, members would meet on a periodical and ad hoc basis, which would in turn affect its efficacy.
Deployment of members on a full time basis means more time to hear and conclude cases. Expedited determination of rows will also mean more revenue being released for collection by KRA.
Other measures that have been put in place include use of more researchers, better working environment and procurement of vehicles to ease staff movement. Between January and March this year, 72 appeals were heard pending judgement. This shows some progress since the directive to have the tribunal sit on a full-time basis was effected. Besides the cases so far heard before the TAT, another 84 appeals with revenue of above Sh300 million each are set to be determined within 50 days.
Another plus for TAT is a High Court directive issued a while back directing all appellants with tax disputes to file their cases with the tribunal as the first court of instance.
Prior to this, filing of tax dispute appeals would be done haphazardly thereby affecting resolution efficiency. Following this order, tax appeals are only admissible to the High Court after they have gone through TAT.
As an alternative avenue for resolving tax disputes, TAT has continued to gain traction among taxpayers locked in disputes with the taxman. Why are taxpayers embracing the tribunal? First, there is less formality at as is characteristic of the normal judicial process thereby making it more comfortable for taxpayers.
Secondly, unlike the normal judicial process where filing fees are determined by the amount of revenue in question, TAT charges a flat rate of Sh20,000. In addition, taxpayers who file appeals with TAT are at liberty to either represent themselves or by an agent. This is unlike the judicial process where one must be represented by a lawyer and this could be expensive.
Time factor is a very key aspect in resolution of disputes. Taxpayers are continuously embracing TAT because of the duration taken to hear and determine a case.
According to the TAT Act, 2013, appeals should be heard and determined within 90 days. With the now enhanced capacity, the resolution rate is set to improve significantly.
It is, however, important to note that not all tax disputes qualify for a hearing and determination before the TAT in accordance to Section 52 of the Tax Procedures Act. Such cases include an appeal challenging an assessment, an appointment to be a tax representative and a determination of the amount that a tax representative is liable to pay. Others include a case of self-assessment, a refund decision, a decision requiring repayment of a refund and a demand for a penalty.
As mentioned earlier, tax disputes are a normal occurrence in the course of tax administration. Taxpayers should, therefore, continue embracing resolution of their disputes through the tribunal for expedited decisions.
Matuku is commissioner for legal services and board coordination at Kenya Revenue Authority