The Tax Procedures Act, No 29 of 2015 (TPA), provides for an elaborate Internal Dispute Resolution Mechanism (IDRM). A tax dispute commences with an objection by the Taxpayer to a tax decision made by the Commissioner or to an appealable decision as stipulated under the TPA, 2015. The dispute culminates to an Appeal to the Tax Appeals Tribunal or Courts of Law.

This Framework seeks to improve on the IDRM by introducing ADR as an additional and/or alternative means of resolving tax disputes outside the judicial and quasi-judicial process.

ADR is a voluntary, participatory and facilitated discussion over a tax dispute between a taxpayer and the Commissioner. It is in the form of facilitated mediation and not arbitration as envisaged in the Arbitration Act, (Chapter 49 Laws of Kenya), as the facilitator has no power to impose any decisions regarding the outcome of the tax dispute. Instead, the parties are facilitated to find a solution to the dispute.

Overall, ADR seeks to enrich the entire dispute resolution process by providing flexibility and timely/early dispute management without the limitations imposed by judicial and quasi-judicial processes as regards technical procedures, untimely decisions and the rising costs of litigation.

Today, ADR is widely favoured over litigation and applied in a number of Tax Revenue Administrations globally with great success. This Framework has been benchmarked against the experiences of these Tax Revenue Administrations.

Read The Alternative Dispute Resolution Framework in full.