Settling a tax dispute through KRA's ADR
What KRA's Alternative Dispute Resolution is, who takes part, the duties it brings, how to apply, and how it compares with objection and appeal.
By Achekam · · 4 min read · For Running a business businesses in Kenya
A business receives an assessment it believes is wrong. Perhaps KRA has treated a supplier's credit note as income, or disallowed costs the business can document. The formal routes are well known: object, and if the objection fails, appeal. They are also slow, formal and adversarial, and many owners would rather sit down with KRA and settle the matter on the facts.
KRA offers a way to do that. Its Alternative Dispute Resolution process, usually called ADR, is designed for settling tax disputes by agreement. This article explains what ADR is, who takes part, what it asks of the taxpayer, how to apply and how it sits beside objection and appeal.
A route outside the courts and the Tribunal
KRA says ADR resolves tax disputes outside the courts and outside quasi-judicial processes such as the Tax Appeals Tribunal.
That is the essential difference. In an appeal, a tribunal or court decides who is right. In ADR, nobody hands down a ruling: the business and KRA work towards a settlement both can accept. If the discussion succeeds, the dispute ends by agreement. If it does not, the business still has to look to the formal routes.
ADR tends to suit disputes that turn on facts and documents: whether expenses were incurred, how a transaction was structured, what a contract required. Those are matters that full disclosure and a structured conversation can settle. It is less promising where the business is unwilling to put everything on the table, for reasons the next section explains.
The taxpayer, the Commissioner and the facilitator
KRA names three parties to an ADR process: the taxpayer, the Commissioner and a facilitator. The Commissioner speaks for KRA. The facilitator, as the title suggests, steers the process between the two sides.
For the business, the practical question is who will represent it. Send someone who knows the facts behind the dispute and who has authority to agree terms, supported by the accountant or adviser who prepared the figures. A representative who has to go back to the owner on every point slows everything down.
Full disclosure, confidentiality and agreed timelines
KRA sets out four obligations for the parties. They must make full disclosure of all material facts, keep the process confidential, attend all meetings and keep to the agreed timelines.
Each has a practical consequence:
- Full disclosure means the business brings every relevant document, including the unhelpful ones. ADR is not a negotiation in which information is traded tactically.
- Confidentiality means what is said in ADR stays there. Agree internally who in the business will know the details.
- Attendance means meetings are not optional or delegable at the last minute. Put the dates in the diary of everyone who must be there.
- Agreed timelines mean the business must deliver documents and responses when promised. A missed date undermines the process that was meant to save time.
Applying to the Tax Dispute Resolution Office
KRA says a taxpayer applies by submitting the completed ADR application form, with supporting documents, to the Tax Dispute Resolution Office at Ushuru Pension Towers, Block B, 7th Floor, Nairobi.
A sensible application pack includes the decision or assessment in dispute, any objection already lodged and KRA's response to it, a short statement of what the business says is wrong and why, and the documents that prove it: contracts, invoices, bank statements and reconciliations. Number the documents and refer to them by number in the statement, so the facilitator and the Commissioner can follow the argument.
Before you rely on ADR, confirm with the Tax Dispute Resolution Office that your dispute, at its current stage, is one it will take.
ADR compared with objection and appeal
| Route | What it is | Who decides |
|---|---|---|
| Objection | A written notice of objection to the Commissioner, which KRA says must be lodged within thirty days of being notified of the decision, under section 51(2) of the Tax Procedures Act | KRA, on review |
| Appeal | A case before the Tax Appeals Tribunal, a quasi-judicial body | The Tribunal |
| ADR | A facilitated, confidential process outside the courts and the Tribunal | Nobody imposes a result; the parties agree |
One caution. KRA's ADR summary does not say that applying for ADR stops the objection clock. Treat the thirty days as running unless KRA or your adviser confirms otherwise in your case, and lodge a valid objection in time if there is any doubt. Writing a valid notice of objection explains what that notice must contain, and appealing to the Tax Appeals Tribunal covers the next formal step.
Keeping the dispute file in Achekam
A tax dispute generates paper quickly, and ADR's disclosure duty makes a complete, orderly file more important than usual.
Achekam's Document Centre is a folder-based store where a business can upload files or whole folders, tag them, search them and keep earlier versions when a document is replaced. Give the dispute its own folder, tag each document by type (assessment, correspondence, evidence, minutes), and upload revised schedules as new versions so the history of each figure stays visible. If your accountant works in Achekam, the firm keeps its own folder for your business in its Document Centre, with the same versioning and search, so both sides can work from the same set of papers.
For deadlines, Achekam computes objection and appeal deadlines for Kenyan assessments from the approved administration rule, set to the end of the day in Africa/Nairobi. Record the assessment as soon as it arrives, so the objection deadline is visible while ADR talks are still being arranged. Groups that also deal with Nigeria's tax authority will find the two countries' time limits side by side in objection deadlines in Nigeria and Kenya.
KRA's page on Alternative Dispute Resolution describes the process, the parties' roles and how to apply. Read it with your adviser before you decide which route to take.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
