The Tax Appeals Tribunal (Amendment) Bill, 2021 (‘the Bill’) proposes to amend the Tax Appeals Tribunal Act, 2013 (‘TAT Act, 2013’) to facilitate the expeditious disposal of tax disputes at the Tax Appeals Tribunal (‘the Tribunal’). Below we consider the most salient proposals in the Bill:

1. Review process before the Tribunal clarified…but questions still remain

Current legislation provides that a party may apply for review of a decision of the Tribunal but does not stipulate when a party may opt to do so as opposed to filing an appeal to the High Court. In addition, the current legislation does not provide a timeline within which a party may apply for review of a decision of the Tribunal. The Bill addresses these shortcomings.

Under the proposed amendments, a party aggrieved by a decree or order of the Tribunal may apply to the Tribunal for a review within seven (7) days, provided they have not appealed against the decree or order of the Tribunal to the High Court. Simply put, a party may only apply for a review if they have not filed an appeal against the decision of the Tribunal.

The circumstances under which a party may apply to the Tribunal for a review are:

1. Where there is new and important evidence which, despite the exercise of due diligence, was not within the knowledge of the applicant seeking a review or could not have been produced at the time the decree or order was made;
2. Where there is an error apparent on the face of the record. Generally, such errors are visible and self-evident. They do not require any elaborate argument or legal reasoning to be established, for example, spelling mistakes and arithmetic errors; or,
3. For any other sufficient reason.

Once a party makes an application for review, the Tribunal has the discretion to set aside, vary or affirm the decree or order with reasons.

Whilst the proposed provision is a step in the right direction, it does not set out a timeline within which the Tribunal must determine an application for review. It may be prudent for parties to apply to stay any enforcement action until the application for review is determined.

2. Introduction of a timeline for service of a notice of appeal when appealing decisions to the High Court

The Bill provides that a party appealing a decision of the Tribunal to the High Court must serve the notice of appeal within two days of filing. The TAT Act, 2013 does not currently provide for timelines within which the notice of appeal must be served which has resulted in instances where parties file notices of appeal within 30 days but only serve them at their own convenience. This has led to uncertainty on the part of the party that was successful before the Tribunal as it cannot establish whether litigation is at an end or whether the matter would be proceeding on appeal to the High Court. This has placed taxpayers at a disadvantage as they are unable to arrange their affairs accordingly, for instance, they cannot tell whether to reverse or maintain provisions for the tax in dispute in their books.

This amendment will ensure that parties file and serve notices of appeal within a definite time. It will also ensure that the successful parties are notified early of the actions taken and the appeals proceed expediently.

3. Tribunal to be brought under the purview of the Judicial Service Commission (JSC)

Currently, the Chairman and members of the Tribunal are appointed by the Cabinet Secretary responsible for the National Treasury. The Bill proposes to give the JSC power to appoint and remove members of the Tribunal. This is in line with the judgment of the High Court in Okiya Omtatah Okoiti v Judicial Service Commission & 2 others; Katiba Institute (Interested Party) [2021] eKLR, delivered on 11th March 2021, where the court held that Tribunals under Article 169(1)(d) of the Constitution must be transferred to the Judiciary and the appointment and removal of their members be undertaken by the JSC. The proposed amendments set out the process and timelines for filling vacancies at the Tribunal. Under the saving provisions, however, the current Chairman and members of the Tribunal will serve out the rest of their term.

This amendment will increase the extent to which the Tribunal is perceived as an independent and impartial arbiter of tax disputes, which should give taxpayers confidence.

4. Other amendments

The Bill also proposes amendments that should improve the impartiality, efficiency, and effectiveness of the Tribunal. Key among them include:

1. The members appointed to the Tribunal will consist of at least five (5) advocates of the High Court but not more than nine (9). Currently, a maximum of five (5) advocates may be appointed as members of the Tribunal.
2. The Chairman and members of the Tribunal will serve on a full-time basis. Currently, there is no requirement for them to serve on a full time basis.
3. Persons who have been employees of the Kenya Revenue Authority (KRA) for the five (5) preceding years are precluded from being appointed to the Tribunal. At present, only current employees of KRA are precluded.
4. The Secretary to the Tribunal will be appointed by the Public Service Commission and their duties have been specifically defined to include:
   1. Day-to-day management of the Tribunal’s affairs;
   2. Record keeping in respect of tax appeals filed, judgments delivered and negotiated settlements; and
   3. Providing policy and strategic leadership of the Tribunal under the guidance of the Chairperson.
   
   Currently, the Secretary is appointed by the Cabinet Secretary responsible for the National Treasury and their duties are not spelt out.
5. The Tribunal is to have a fund which all its revenue should be directed to including the KShs. 20,000 paid by taxpayers when filing an appeal.

Conclusion

The proposed amendments are commendable, as they will promote the expeditious resolution of tax disputes.