Pricewaterhouse Coopers(PwC) Kenya says proposed amends to the tax appeals tribunal act will limit taxpayers’ right to appeal and access to justice.
During his recent budget speech, Treasury CS Ukur Yatani proposed to introduce to the law a requirement for payment of a deposit of 50% of the tax in dispute when an appeal is made against the Tax Appeals Tribunal ruling at the High Court.
PwC says this prevents the taxpayer from appealing to the High Court and appears to override powers of the High Court in matters concerning the treatment of sums in disputes.
The tax consulting firm further says that given that tax disputes can take several years to be resolved, the provision is likely to affect the cash flows of taxpayers significantly.
The amendments propose that in the event of a favourable ruling to the taxpayer, there is a window of 30 days upon which the taxpayer will be refunded the 50% deposit.
But PwC Kenya notes that this provision may create disincentives in the dispute resolution process.
It may persuade the KRA to raise exaggerated assessments to collect the refund in cases where it wins a case at the Tax Appeals Tribunal.
It also gives the KRA a powerful bargaining position in an alternative dispute resolution process, as taxpayers may be intimidated to settle cases rather than pursue the litigation process.
The provision also raises issues of fairness as it is not clear whether the 50% deposit will accrue interest at market rates that will be payable to the taxpayer in the event of a successful appeal.
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