KRA Alternative Dispute Resolution in Kenya (ADR)

Tax disputes with KRA are stressful. Litigation through the Tax Appeals Tribunal and other judicial courts is one of the go-to processes to resolve these disagreements. However, this litigation process can be overwhelming, expensive, and time-consuming. That’s where KRA’s Alternative Dispute Resolution (ADR) comes in. With ADR, you don’t have to sit through the overly formal and legalese tax conflict resolution process with judges, lawyers, and tax professionals. Instead, you enter into a voluntary and facilitated mediation with the KRA Commissioner and resolve the tax dispute.

At Gichuri & Partners, we provide professional support to help you navigate the KRA alternative dispute resolution process in Kenya. Our team will help you settle tax disagreements with the KRA cost-effectively and amicably without involving the courts.

What is KRA Alternative Dispute Resolution (ADR)

ADR is an alternative tax dispute resolution process established under the Tax Procedures Act. Through ADR, taxpayers can enter into a voluntary mediation process with the KRA Commissioner, facilitated by a third party. In simple terms, ADR provides an alternative method to settle tax disputes out of court. Normally, taxpayers resolve tax disputes in judicial courts or the Tax Appeals Tribunal. The process is time-consuming and formal, overwhelming both parties. ADR is preferred because it emphasizes dialogue, dialogue, and healthy compromise instead of adversarial litigation seen in the courts. The ADR process in Kenya involves three parties. These are:

• The taxpayer
• KRA Commissioner
• Facilitator

Is Every Tax Case Eligible for KRA ADR in Kenya?

Can every tax dispute be solved through the ADR method?  No, unfortunately, only some cases are eligible for ADR. They include:

• An individual taxpayer with pending disputes on tax assessment
• Businesses disagreeing with KRA on VAT, income tax, or excise duty
• Transfer pricing disputes and other tax disagreements between KRA and corporations and multinationals
• Nonprofits and NGO are facing tax compliance issues with KRA
• Other unique tax disputes that meet the eligibility criteria for ADR in Kenya

The following tax disputes are not eligible for the KRA ADR process in Kenya:

• Criminal tax offenses
• Tax disputes already determined in court or TAT
• Tax and compliance issues beyond KRA’s jurisdiction

If you’re uncertain whether your tax dispute meets the ADR eligibility criteria, our tax experts can examine the case and advise on the best way forward.

Benefits of ADR: Why You Should Choose ADR Instead of Litigation

Taxpayers are opting for KRA’s alternative dispute resolution due to its numerous benefits. These include:

• Cost Effectiveness: Negotiations are way cheaper than court hearings and other legal expenses.
• Confidentiality: Court and tribunal hearings are public and may reveal sensitive taxpayer information. On the other hand, ADR preserves confidential information because only the three participating parties are privy to the sensitive tax details.
• Time Saving: ADR negotiations and settlements are less time-consuming than lengthy court hearings, which can take months or years.
• Preserves Relationships: It can be unsettling to be in the bad books of KRA, which is a likely outcome in litigation. Mediation preserves this relationship because the outcome is usually a win-win situation for both parties.
• Flexibility: Out-of-court negotiations offer flexible solutions. The process allows for settlement adjustment until both parties are content.

Types of Tax Disputes Resolvable Through ADR. There are key differences between the tax disputes that can be resolved via the TAT and courts, and those that can be handled through ADR. The KRA ADR process can be applied to the following tax disputes:

• Income tax disputes
• Excise duty and other customs tax disputes
• Value Added Tax (VAT) tax disputes
• Penalty and interest disputes
• Complex KRA objections
• Transfer Pricing and cross-border tax disputes
• Disputes arising from KRA audits and assessments

KRA ADR Services in Kenya –  What We Do

At Gichuri & Partners, we provide comprehensive ADR services to individual taxpayers, businesses, non-profits, large corporations, and multinationals. Here’s what we do for you:

• Case Review and Advisory: As we mentioned earlier, not all tax disputes are eligible for the ADR process in Kenya. Our team of experts will review your case and assess its eligibility. We will then advise on the best step forward.
• Preparing ADR Requests: After establishing that your case is indeed eligible for ADR, we will prepare a formal ADR request and file it with the relevant authorities. We handle all documentation and file the request per the provided guidelines and on time.
• Representation: Facing an ADR process alone is a little overwhelming. Our tax experts will represent you in the discussions, ensuring your interests are well-protected.
• Negotiation and Settlement: We will draft a solid negotiation and settlement strategy to ensure you get the most favorable outcome from the mediation process.
• Drafting Settlement Agreement: After reaching a consensus with KRA, you need a fair and enforceable settlement agreement. We will draft one for you to ensure it’s compliant with the provided guidelines.
• Post ADR Support: Settling is not the end of the ADR process for a taxpayer. We provide ongoing support to ensure the smooth implementation of the settlement agreement and complete resolution of the dispute.

Why Choose Us

Professional support simplifies the navigation of a tax dispute, whether via the Tax Appeal Tribunal (TAT) or the alternative dispute resolution strategy. At Gichuri & Partners, we are a tried and tested partner in solving tax disputes with KRA. Here’s why we are the go-to expert assistance in ADR cases:

• Expertise and Experience: We have proven expertise in tax laws and dispute resolution. For the last decade, we have helped individual taxpayers and businesses resolve tax disputes with the KRA.
• Remarkable Negotiation Skills: When you come to us, we put your financial interests first, seeking the most favorable outcome in every negotiation.
• Ongoing Support at Every Stage of the Process: The ADR process in Kenya involves various stages, including filing a request, appointing a facilitator, and attending the mediation sessions. We provide support at every stage until the tax dispute is resolved.

Get Expert Assistance in Resolving Your Tax Dispute

The KRA alternative dispute resolution process offers a convenient and cost-effective way to resolve tax disputes. If you’re facing a daunting tax disagreement with KRA, don’t go through it alone. We can help you through it, protecting your interests and vouching for the most favorable settlement through the ADR process. Are you ready to get started? Contact us for the best KRA ADR services in Kenya.