The National Treasury is seeking to set up small Kenya Revenue Authority tax courts that will be dedicated to handling tax disputes.
According to the Treasury, the KRA tax courts will be modeled similarly to the US tax courts that are used to settle more than 90 per cent of cases where the Internal Revenue Service (IRS) has issued a deficiency notice.
Deficiency notices in the US usually mean that individuals or businesses owe the government money.
The proposal for KRA tax courts is contained in the draft National Tax Policy by Cabinet Secretary Ukur Yatani’s office. According to Yatani’s proposals, the tax court will have its judges who will travel to courts outside Nairobi to settle cases where the KRA has sued individuals or businesses or where the taxman is facing legal action.
“Provide for autonomy of the out of court process or out of Tax Appeals Tribunal process of dispute resolution by delinking the process from the KRA and establish a specialized tax court,” the policy from the National Treasury cites.
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Currently, disputes with the KRA are resolved through the Tax Tribunal. If a party is dissatisfied with the Tribunal’s ruling, they are allowed to file a case at the High Court.
The Kenya Revenue Authority has lately been increasing its tax net, a move that saw it make history by collecting over Sh. 2 trillion revenue in the previous fiscal year June 2021 to June 2022.
The KRA collected Sh. 2.03 trillion in comparison to Sh. 1.669 trillion in the June 2020 to June 2021 fiscal year.
KRA surpassed the original target of Sh. 1.882 trillion and two other upward revenue target revisions of Sh. 1.911 trillion, which was later revised to Sh. 1976 trillion.
This is the first time KRA has surpassed its original target in 14 years, after the previous target revisions were adjusted downwards.
“The positive revenue growth rate mirrors the improved tax compliance from patriotic taxpayers who contributed to the collection of revenue surplus of Sh. 148.9 billion against the original target, which is the highest surplus ever in KRA’s history, said KRA.
