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Objecting A Tax Decision

The Tax Procedures Act (2015) was enacted to ensure consistency and efficiency in the administration of tax laws, to facilitate tax compliance by taxpayers and to ensure effective and efficient collection of tax. The Act in addition to laws enacted previously such as the Kenya Revenue Authority Act, CAP 469, the Income Tax Act, CAP 470, the VAT Act and the Excise Duty Act give the Kenya Revenue Authority (hereinafter KRA) far sweeping powers in tax administration. Tax administration includes assessment, collection, enforcement, litigation, publication and statistical gathering functions under the various tax laws or conventions.

As part of tax administration measures, the Kenya Revenue Authority (KRA) issues tax decisions which may take various forms. Under Section 2 of the Tax Procedures Act, a tax decision is generally an assessment or a determination of the amount of tax payable or that will become payable by a taxpayer. The Act also provides that a tax decision may include a decision on an application for amendment of a self-assessment, a refund decision, a decision on an erroneous refund of tax and a demand for a penalty. 

Tax decisions and tax assessments go hand in hand and under the Tax Procedures Act, the various forms of tax assessment are as highlighted below:

  • 1

    Self assessment - (Section 28, TPA) where a taxpayer who has submitted a self-assessment return in the prescribed form for a reporting period shall be treated as having made an assessment of the amount of tax payable (including a nil amount) for the reporting period.
  • 2

    Default assessment - (Section 29, TPA) where a taxpayer has failed to submit a tax return for a reporting period in accordance with the provisions of a tax law, the Commissioner may, based on such information as may be available and to the best of his or her judgement, make a default assessment.
  • 3

    Advance assessment - (Section 30, TPA) occurs where the commissioner based on the available information and to the best of his or her judgement, makes an assessment of the tax payable by a taxpayer specified in section 26(in cases of bankruptcy, liquidation, a business leaving Kenya, death of a taxpayer).

All these assessments may be amended either by the Commissioner or by a tax payer who has made a self-assessment on application to the commissioner and on meeting the conditions set out in the Tax Procedures Act.

How do tax objections arise?

Contentious tax decisions mostly originate from tax audits that are conducted by the KRA from time to time. A tax audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.

The Audit is conducted by officers of KRA going through records then making a request to a tax payer to make available any such records or information as may be required. Under the provisions of Sections 58 to 61 of the TPA, the Kenya Revenue Authority is vested with far sweeping powers in conducting investigations and seeking any information it considers relevant from a tax payer as follows:

  1. Section 58 of the TPA gives KRA the authority to inspect goods, records and any other material the authority may deem necessary.
  2. Section 59 of the TPA also gives power to KRA to compel production of documents.
  3. Section 60 also gives the Commissioner or any authorised officer the power to search and seize. The only reprieve under this section is that the Commissioner or an authorised officer is not allowed to retain any document or a data storage device seized under this section for a period longer than six months unless the document or data storage device is required for the purposes of any proceedings under the Act or any other written law.

These immense powers of the KRA with regards to investigation/ audit were challenged in the case of Okiya Omtatah Okoiti v Attorney General & another [2020] eKLR Petition No. 156 of 2017 on the basis that Sections 57, 58, 59 and 99 of the TPA infringed on the right to privacy as espoused in Article 31 of the Constitution. The petition was however dismissed by the Court which was of the view that the provisions were not unconstitutional for infringing on the right to privacy, rather, the provisions were justified limitations to the right since the effect of the limitation of the right was minimal; as the right is only limited in relation to the tax information of the individual and not the individual’s family or private affairs.  Nonetheless, the Court also held that the powers granted to the Commissioner are only meant to be engaged where there is doubt about the veracity of an individual’s tax assessment.

Procedure For Objecting To A Tax Decision (Section 51 – Section 53 Of The Tpa)
Section 51- Objection to a Tax Decision

A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law. This is done through a notice of objection to the decision. The notice should be in writing and addressed to the Commissioner within 30 days of being notified of the decision. A taxpayer may however apply in writing to the Commissioner for an extension of time to lodge a notice of objection.

Key validities of a Notice of Objection
  1. The Notice should state precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments.
  2. If the objection relates to an assessment, the taxpayer is required to have paid the entire amount of tax due under the assessment that is not in dispute or has applied for an extension of time to pay the tax not in dispute.
  3. All relevant documents relating to the objection should be submitted.

Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall within a period of fourteen days notify the taxpayer in writing that the objection has not been validly lodged.

Where the tax decision to which a notice of objection relates is an amended assessment, the taxpayer may only object to the alterations and additions made to the original assessment.

Determination of the Objection

Where a notice of objection has been validly lodged within time, the Commissioner shall consider the objection and decide either to allow the objection in whole or in part, or disallow it, and Commissioner’s decision shall be referred to as an “objection decision”. This objection decision shall include a statement of findings on the material facts and the reasons for the decision and has to be made by the Commissioner within sixty days from the date of receipt of a valid notice of objection failure to which the objection shall be deemed to be allowed.

The Commissioner shall then notify the taxpayer of the objection decision in writing and shall take all necessary steps to give effect to the decision, including, in the case of an objection to an assessment, making an amended assessment. What follows is the appeal process for those dissatisfied with the objection decision.

Section 52- Appeal of Appealable Decision to the Tribunal

A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act, 2013 (No. 40 of 2013).

A notice of appeal to the Tribunal relating to an assessment shall be valid if the taxpayer has paid the tax not in dispute or entered into an arrangement with the Commissioner to pay the tax not in dispute under the assessment at the time of lodging the notice.

Section 53- Appeals to High Court

A party to proceedings before the Tribunal who is dissatisfied with the decision of the Tribunal in relation to an appealable decision may, within thirty days of being notified of the decision or within such further period as the High Court may allow, appeal the decision to the High Court in accordance with the provisions of the Tax Appeals Tribunal Act, 2013 (No. 40 of 2013).

Section 54- Appeals to Court of Appeal

A party to proceedings before the High Court who is dissatisfied with the decision of the High Court in relation to an appealable decision may, within thirty days of being notified of the decision or within such further period as the Court of Appeal may allow, appeal the decision to the Court of Appeal.


In any proceedings challenging a tax decision, the burden shall be on the taxpayer to prove that a tax decision is incorrect. [Section 56(1) TPA]

An appeal to the High Court or to the Court of Appeal shall be on a question of law only. [Section 56(2) TPA]

When a taxpayer appeals a tax decision to the Tribunal, the High Court and subsequently to the court of appeal, the taxpayer shall rely only on the grounds stated in the objection to which the decision relates unless the Tribunal or Court allows the person to add new grounds. [Section 56(3) TPA]

A tax dispute may also be settled out of court or tribunal where a Court or the Tribunal permits the parties to do so and the settlement has to done within 90 days after such permission is given. However, if parties fail to agree, the dispute may be referred back to court.

Record keeping and maintenance of documents- under Section 23 of the TPA, taxpayers are expected to maintain any document required under a tax law so as to enable the person’s tax liability to be readily ascertained and to retain the document for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law. This provision is important so that taxpayers may be aware of what period to keep their records. The period of ensuring the documents and records are well kept also extends in instances where a proceeding was commenced before the end of the five year period.

Under Section 49 of the TPA, where the Commissioner has refused an application under a tax law, the notice of refusal shall include a statement of reasons for the refusal.