Kenya Revenue Authority’s (KRA) Alternative Dispute Resolution (ADR) successfully resolved three hundred and nineteen (319) cases during the first half of this financial year, compared to two hundred and forty-three (243) cases resolved during a similar period in the last financial year. This signifies a 31% growth in the number of cases resolved. KRA received five hundred and fifty-nine (559) ADR applications between July and December 2021 compared to four hundred and ninety-three (493) ADR applications received during the first half in the Financial Year 2020/2021, a growth of 13%.  

The growth in the number of applications to ADR not only signifies an outstanding performance but also confirms the growth in the number of taxpayers who are increasingly embracing ADR in preference to other dispute resolution mechanisms such as litigation processes.

During the half year period July 2021 to December 2021, the average number of days taken to resolve tax disputes at ADR was forty-two (42) days which is less than half of the statutory timelines of ninety (90) days. This represented a higher level of efficiency compared to the time taken to resolve a tax dispute in an adversarial process, which often spans years.  According to the Tax Procedures Act, cases under discussion outside of the Tax Appeals Tribunal or Courts should be resolved within ninety (90) days. This provision ensures that disputes are resolved expeditiously and not inordinately delayed. Notwithstanding the legal provision for resolution of tax disputes within ninety (90) days, cases can and have previously been settled in considerably less time through the ADR process.

KRA is encouraging taxpayers to utilise the ADR process in resolving tax disputes. The ADR process is more flexible, cost-efficient, confidential and time-saving. The process also provides the parties with more control over the procedures for resolving the disputes and the results. Parties who resolve their disputes through ADR are generally more satisfied because they have the opportunity to directly participate in arriving at the outcomes and agreeing on the terms of settlement. Through structured discussions and settlement processes at ADR, more disputes are resolved efficiently and with greater satisfaction to all parties. The process has also enabled the tax administration
to foster good relationships with taxpayers and enhance tax compliance going forward.

Alternative Dispute Resolution (ADR) was initiated by KRA in the year 2015. Over the years, ADR has gradually grown to be the preferred process in resolving tax disputes. During its inception in 2015, only forty-nine (49) cases were resolved. The number of cases resolved have since grown by more than 100%.

John S. Kieranan, in Cordozo Law review (2018) observes that “…the primary answer to the challenge of how to achieve decisions or settlements in disputes at lower cost and more quickly is that those goals can be achieved if participants in the process truly embrace reduced cost and greater speed of resolution as a value that is important to fair administration of justice and effective service of disputing parties’ interests.”

Drawing an analogy from the requirement of Section 55 of the Kenyan Tax Procedures Act 2015 for settlement of tax disputes out of Court or Tribunal within ninety days, it can be deduced that timely resolution of the tax disputes is a priority for the Government of Kenya. A process which is devoid of this taking more time than is stipulated is sure to frustrate and aggravate the disputing parties even further. ADR at KRA is aimed at moving away from conventional adversarial and confrontational practices, towards a more inclusive and participatory process with a win-win outcome for the concerned parties.

Commissioner Legal Services & Board Coordination