Make out-of-court deals the norm in tax disputes

The Kenya Revenue Authority (KRA) should lean into negotiations to settle tax disputes. Based on the outcome of its alternative dispute resolution (ADR) programme, this can unlock revenue and reduce the burden of drawn-out court cases which can last for more than a decade.

The taxman says it netted Sh4.37 billion in revenue from out-of-court deals in the first quarter of the current fiscal year.

Based on the ongoing tax amnesty programme that runs until June next year, the KRA has raised a separate Sh3.4 billion.

The agency stated that potential tax revenue of over Sh300 billion is currently locked in court battles. The Finance Act of 2023 introduced a tax amnesty for interest and penalties on tax debt. The amnesty took effect on September 1, 2023.

Through the programme, taxpayers who have no outstanding principal tax for the period to December 31, 2022, but have penalties and interest qualify for the waiver.

The KRA should publicise ADR which provides taxpayers with flexibility and timely/early dispute management without the limitations imposed by judicial and quasi-judicial processes and the rising costs of litigation.