The tax disputes handled by Kenya Revenue Authority (KRA) through out-of-court agreements increased by 31 percent in the six months to December 2021.
The taxman resolved 319 tax cases through Alternative Dispute Resolution (ADR) in the first half of the current financial year up from 243 in a similar period in 2020.
The ADR unit received 559 applications between July and December 2021 compared to 493 received during the first half in the Financial Year 2020/2021, representing a 13 percent uptick.
According to the KRA, the growth in the number of applications to ADR not only signifies good performance but also confirms the increase in the number of taxpayers who are embracing out-of-court dispute resolution mechanisms.
Within the same period, KRA also reduced the number of days it took to resolve the cases between the authority and aggrieved taxpayers from the statutory timelines of 90 days to 42 days.
In normal court processes, tax disputes often take years to resolve.
“The ADR process is more flexible, cost-effective, confidential and time-saving,” KRA’s Commissioner Legal Services & Board Co-ordination Paul Matuku said in an update.
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 the settlement, added KRA
Tax Procedures Act states that cases under discussion outside of the Tax Appeals Tribunal or Courts should be resolved within ninety (90) days.
ADR was initiated by KRA in 2015 and the mechanism has gradually grown to be the preferred process in resolving tax disputes. At its inception in 2015, only 49 cases were resolved.