The Burden of Proof in Kenyan Tax Disputes

FFP CONSULT LTD

FFP CONSULT LTD Tax Advisory | Compliance | Dispute Support The Burden of Proof in Kenyan Tax Disputes What every business should know before KRA raises an assessment

Why this guide matters

When KRA raises an assessment against your business, the law does not start from a neutral position. It starts by assuming KRA is right. Knowing this early, and preparing for it, decides whether a dispute goes your way. This guide explains the rule, the deadlines that protect you, and the evidence that actually wins.

The core rule: you carry the burden

• Burden of proof on the taxpayer — Section 56(1) of the Tax Procedures Act places the burden of proof on the taxpayer. In any tax dispute, you must prove that KRA's decision is wrong. KRA does not have to prove its assessment is correct. Once KRA issues an assessment, the law treats it as correct until you show otherwise, with evidence. (Section 56(1) of the Tax Procedures Act)

How KRA can assess you

• Best-judgment assessment — Under Section 31, KRA can raise an assessment using the information available to it, on a best-judgment basis. The figure does not have to be exact. It only has to be reasonable from KRA's side. This is why an assessment can look inflated and still be fully enforceable until you disprove it. The response is never to argue louder. The response is to produce records. (Section 31)

The standard you must meet

• Standard of proof — Tax disputes are civil matters. You prove your position on a balance of probabilities, meaning your version is more likely than not. Where KRA alleges fraud, the courts expect clearer and stronger evidence. In every case, documents decide the outcome. Missing records weaken your case; consistent records win it. (balance of probabilities; higher standard where fraud is alleged)

What actually discharges the burden

KRA responds to file-grade evidence, not explanations. Build your position on documents that reconcile to your declared figures: � Tax invoices and eTIMS or ETR records � Bank statements and M-PESA statements that tie to your declared income � Contracts, local purchase orders, delivery notes, and stock movement records � Payroll records supporting PAYE � Audited accounts with supporting schedules � A clear audit trail linking every figure to a source document Keep your records for at least five years. Remember that your own documents can work against you: a bank narration that contradicts your declared income becomes KRA's evidence, not yours.

Your rights and the deadlines that protect them

Every stage below carries a hard deadline. Miss one and you can lose the right to dispute the assessment, whatever the merits. Objections are only valid when lodged on iTax; a letter or email alone does not stop the clock.

Dispute stages and deadlines

Stage	Deadline	What you must do
Object to the assessment	30 days from the date KRA notifies you	Lodge a notice of objection on iTax. State your grounds, the amendments you want, and your reasons. Pay or arrange the tax that is not in dispute.
KRA issues its objection decision	60 days from a valid objection	If KRA does not decide within 60 days, the law treats your objection as allowed.
Appeal to the Tax Appeals Tribunal (TAT)	30 days from the objection decision	File a notice of appeal. Pay the refundable fee of KES 20,000. Pay or arrange any tax not in dispute.
File your appeal documents at the TAT	14 days from the notice of appeal	Submit the memorandum of appeal, statement of facts, and the objection decision.
Appeal to the High Court	30 days from the TAT decision	Available on questions of law only.

Your rights and the deadlines that protect them

The 60-day rule works in your favour. If KRA fails to issue an objection decision within 60 days of your valid objection, the law deems your objection allowed.

Where businesses most often lose

� Missing the 30-day objection window � Filing vague objections with no specific amendments or reasons � Not lodging the objection on iTax � Weak or missing documentation behind the disputed figures � Saying too much to KRA in meetings before the position is prepared � Raising new grounds late, since you are generally held to the grounds stated in your objection

What to do the moment you receive an assessment

1. Note the date of notification. The 30-day clock starts on that date.
2. Do not reply casually or attend a meeting alone. Send the assessment to us first.
3. Gather the source documents behind the disputed figures.
4. Separate what is genuinely in dispute from what is not.
5. Let us prepare the objection, the grounds, and the reconciliations.

A change worth watching

A constitutional challenge to Section 56(1) is before the High Court. It argues that the taxpayer should not carry the entire burden, particularly where assessments rely on automated, system-generated data outside the taxpayer's control. The current law still applies in full. We will advise our clients if the position shifts.

How FFP Consult helps

We prepare objections, reconciliations, and evidence bundles, represent clients in Alternative Dispute Resolution, and appear before the Tax Appeals Tribunal. The earlier you involve us, the stronger your position. Contact us before the deadline, not after it. Julian Njoroge Maina Tax Partner, FFP Consult

Disclaimer

This guide provides general information on Kenyan tax procedure and does not constitute specific tax or legal advice. Treatment of any particular matter depends on its facts. Contact FFP Consult for advice on your situation.

Contributed by CPA Julian Njoroge Maina, 25241.