Kenya’s Tax Appeal debate isn’t going away. It continues to resurface. Although it was quietly dropped in Parliament, the proposal to amend Tax Procedures Act (TPA) has persistently reappeared in successive Finance Bills since 2024, and the Finance Bill, 2027 may prove no exception.
It seeks to require taxpayers to pay the disputed principal tax, in whole or in part, before filing an appeal against a decision of the Tax Appeals Tribunal (‘Tribunal’ or ‘TAT’), the High Court, or the Court of Appeal.
The latest attempt floated through a supplementary order paper during the Finance Bill, 2026 debate may have been shelved, but the policy question it raises remains far from settled. Currently, the Commissioner is restricted from issuing agency notices against taxpayers who have active appeals before the Tribunal, the High Court, or the Court of Appeal.
At face value, the logic is compelling. The Government is under mounting pressure to raise more revenue in an increasingly tight fiscal environment. While the Kenya Revenue Authority (KRA) exceeded its target in the 2024/2025 financial year collecting about Sh2.57 trillion, performance in the current financial year tells a more nuanced picture.
As per the Statement of Actual Revenues and Net Exchequer released by the National Treasury and Economic Planning in May 2026, collections stood at Sh2.174 trillion against an original estimate of Sh2.627 trillion, reflecting shortfall of about Sh453 billion.
Kenya’s economy grew by 4.7 percent in 2024 and is estimated to have moderated to 4.6 percent in 2025. While this reflects relative resilience, the mild deceleration underscores broader macroeconomic pressures that can dampen revenue performance.
The challenge is not delayed tax disputes, rather it points to a combination of ambitious revenue targets and structural constraints within the economy. In that context, it becomes necessary to ask whether proposals such as ‘pay now, argue later’ are addressing the real problem or merely shifting the burden onto taxpayers.
Proponents of the proposal argue that requiring upfront payment would secure revenue, discourage frivolous disputes, and enhance fiscal predictability. However, beneath this surface logic lies a deeper constitutional and economic tension. Article 47 of the Constitution guarantees every person the right to administrative action that is expeditious, efficient, lawful, reasonable, and procedurally fair. It is not a hollow promise.
It is a safeguard against administrative overreach. Conditioning the right of appeal on prior payment risks undermining that guarantee. Access to justice cannot meaningfully exist where the ability to be heard depends on one’s financial capacity.
In practical terms, the implications are stark. Tax disputes often involve substantial sums, with significant implications for business liquidity.
A prepayment requirement could effectively prevent businesses from pursuing legitimate appeals, not because their cases lack merit, but because they lack liquidity. The result is not efficiency, but exclusion.
In many cases, businesses may be forced to resort to external financing to meet such upfront tax demands. This introduces additional borrowing costs, increases the cost of doing business, and diverts capital away from productive investment. Over time, such pressures can undermine competitiveness and discourage formal sector growth.
More critically, such a policy approach sidesteps the real problem: systemic inefficiency in tax dispute resolution.
While the Tax Procedures Act and the Tax Appeals Tribunal framework prescribe timelines for procedural steps such as filing objections and appeals, they do not impose strict statutory deadlines for the Tribunal to determine cases. In practice, disputes can take years to conclude as they move through the Tribunal, High Court, and Court of Appeal.
Rather than addressing these delays, the prepayment proposal would shift the burden onto taxpayers. It effectively asks them to finance the inefficiencies of the system.
Even more problematic is what happens after the dispute. Section 47 (2) of the TPA provides for refunds of overpaid taxes, but recent amendments introduce a critical caveat: where refunds are not processed within six months from the date of ascertainment, the amounts shall be automatically applied to offset existing or future tax liabilities.
This has institutionalised the use of refund adjustment vouchers (RAVs), meaning taxpayers may not receive cash even after succeeding in their appeals. For businesses without immediate tax liabilities, this strains cash flow and undermines confidence in the system.
If the objective is to unlock revenue trapped in disputes, then the solution lies not in restricting access to appeals but in fixing the structural inefficiencies that cause delays in the first place. A more balanced approach would begin with institutional reform.
As a short-term measure, Alternative Dispute Resolution (ADR) mechanisms should also be strengthened to encourage early settlement of tax disputes, reducing the burden on the courts altogether.
During the 2025/26 financial year, the KRA resolved 993 tax disputes through ADR, unlocking Sh35.062 billion in revenue, according to its Annual Revenue Performance Report. The achievement underscores the effectiveness of ADR in expediting dispute resolution, strengthening taxpayer relations, and facilitating the timely collection of revenue that might otherwise remain tied up in prolonged litigation.
At a broader level, sustainable revenue mobilization will depend on expanding the tax base and supporting economic growth. Bringing more taxpayers into the formal tax net, while fostering an enabling environment for businesses to grow, would reduce the pressure to rely on aggressive or potentially unconstitutional enforcement measures.
As a medium- to long-term reform, Kenya should consider establishing specialized tax divisions within the High Court and corresponding benches in the Court of Appeal, similar to the Constitutional and Judicial Review, Land and Environment divisions.
While this would require time, dedicated resources, and significant institutional investment, the long-term gains in efficiency, consistency, and quality of tax jurisprudence would be substantial. Given the highly technical nature of tax law, dedicated judicial expertise would significantly improve the speed, quality, and consistency of decisions.
This is not a novel proposition. Leading jurisdictions treat tax disputes as a specialised area of law requiring dedicated judicial structures.
The United States of America operates a separate Tax Court with judges experienced in tax matters, while the United Kingdom has established a dedicated Tax Chamber within its tribunal system. Similar specialised tax courts exist in Canada and across parts of Europe. These systems demonstrate that judicial specialisation is a proven tool for improving efficiency and ensuring consistent, high-quality decisions.
Equally important is the introduction of clear statutory timelines for the determination of disputes at each level of appeal. Predictable timelines would reduce delays, accelerate revenue collection, and eliminate the need for coercive prepayment measures.
Ultimately, the recurring reintroduction and withdrawal of the prepayment proposal suggest a policy solution in search of the wrong problem. The Government is right to be concerned about delayed revenue. But requiring taxpayers to pay before they are heard risks undermining constitutional protections, distorting business operations, and eroding trust in the tax system.
There is a better way. Fix the system, not the taxpayer. A tax system that is efficient, predictable, and fair will always collect more because it commands compliance, not compulsion. That is the reform Kenya truly needs.