KRA roots for alternative dispute resolution

The Kenya Revenue Authority (KRA) has urged individuals and companies alike with tax queries to seek alternative dispute resolution to spur economic growth.

This comes as hundreds of companies have taken issue with the taxman over what they term as irregular taxation that has affected their growth.

KRA Commissioner for strategy, innovation and risk management Mohamed Omar said the standoff between KRA and businesses has often tended to drag through the court system, adding that alternative dispute resolution could speed up the process.

“Prolonged legal disputes with the tax authorities may have considerable implications for the taxpayers operations, sometimes even for an enterprise liquidity,” Mr Omar said.

An estimated Sh35 billion is currently held up in dispute pitting the taxman against business entities.

KRA said small and medium enterprises are the most aggrieved given the high cost of compliance.

Mr Omar however said the challenge mostly stems from lack of proper accounting systems on the part of SMEs that sees them fall behind on their tax obligations.

He however said the length court process made it even harder to resolve disputes.

Over the last two years, KRA has cleared 140 tax disputes with businesses with some Sh6.6 billion unlocked.

“Alternative dispute resolution can also lower service costs by shortening the duration of proceedings. Both for the tax payer and the tax authority, reaching a resolution more promptly means less use of human resource and lower expenses,” he said.

The KRA usually imposes hefty fines for companies that fail to file tax returns and pay what it considers are owed.

Report by Brenda Nyamichaba