Kenya Tax Disputes: Court of Appeal Holds KRA to the 60-Day Objection Deadline

• Court of Appeal, 16 September 2026: the Commissioner cannot vary or suspend statutory timelines to await collateral proceedings. An objection not decided within 60 days is deemed allowed. The case arose from VAT refunds of more than Ksh168 million, some outstanding for up to seven years.

• Judicial review is available where KRA makes no decision at all. It cannot be used to force payment of a refund whose underlying entitlement is still contested.

• Geo Chem Middle East (Court of Appeal, 31 July 2026): where the validity of an objection is litigated, the 60-day period under section 51(11) starts only once that dispute is finally resolved. KRA must decide the Sh1 billion (about US$7.7 million) objection by 29 September 2026.

• The two rulings fit together. A threshold dispute over validity delays the start of the clock; collateral proceedings cannot pause a clock already running.

• Jakoline Enterprises (High Court, 21 July 2026): a KSh29.2 million assessment was reinstated. Taxpayers must answer KRA's specific variances with a clear, specific and indexed reconciliation, not bulk records.

• Action points: lodge complete objections, diary the 60 days, pick the right forum and build reconciliations before filing.

The dispute. The case arose from delayed VAT refund claims worth more than Ksh168 million. Some had been outstanding for up to seven years, including claims already audited and others never audited or determined. The taxpayer was also contesting refund claims that KRA had rejected after refusing to treat certain services as zero-rated exported services. KRA's explanation for the delay was that related proceedings were pending before the Tax Appeals Tribunal and the courts.

The holding. The Court of Appeal rejected that explanation. A public authority may exercise only the powers lawfully conferred on it. Where Parliament has set mandatory timelines for a statutory duty, the Commissioner cannot vary or suspend them through administrative expediency, or by deciding unilaterally to await the outcome of collateral proceedings. Nothing in the Tax Procedures Act or the VAT Act gives the Commissioner power to suspend statutory obligations in that way.

The court confirmed the consequence under the Tax Procedures Act: where a taxpayer objects and the Commissioner does not issue an objection decision within the 60-day statutory period, the objection is deemed allowed.

The route to court. The ruling also clarifies when taxpayers may bypass the tax appeals process:

The court distinguished a statutory appeal, which tests whether a tax decision is correct, from judicial review, which tests whether a public authority has acted lawfully and met its statutory duties.

The outcome. The court overturned the earlier decision that had dismissed the whole case. It declined, however, to order KRA to determine or pay the disputed refunds directly. The remaining complaints about compliance with statutory timelines and fair administrative action were sent back to the High Court for determination on a priority basis.

The background. In 2009, the Kenya Bureau of Standards contracted Dubai-registered Geo Chem Middle East to inspect and test imported petroleum products at Mombasa. Its fee was initially 0.6% of the products' CIF value. The government suspended the arrangement in March 2010, after seven months. On 29 July 2016 an arbitral tribunal awarded Geo Chem US$15.4 million, about Sh1.9 billion, for unpaid invoices and loss of income. After a series of challenges, the Supreme Court restored recognition of the award in December 2020.

The tax dispute. KRA assessed Geo Chem on 7 April 2021 for about Sh1 billion (roughly US$7.7 million) in corporation tax, VAT and interest, based on the award. Geo Chem objected on 28 April 2021. Two days later KRA declared the objection invalid for lacking documents required by the Tax Procedures Act.

Geo Chem's arguments. The company argued that it never received the award proceeds, that the assessment was time-barred under the five-year rule, and that KRA should first credit Sh256.4 million it held. Above all, it argued that its objection was deemed allowed because KRA had not issued a substantive decision within 60 days.

The holding. The Court of Appeal rejected the deemed-allowance argument. The law contemplates two separate steps: first, deciding whether an objection has been validly lodged; second, deciding the objection on its merits. The 60-day period under section 51(11) of the Tax Procedures Act governs the second step. Where KRA's finding that an objection is invalid is challenged and overturned, the 60-day period begins only once that validity dispute has been finally determined.

What happens next. KRA must issue its substantive objection decision by 29 September 2026. If it does, and Geo Chem disagrees, the company can appeal to the Tax Appeals Tribunal within the statutory period. If KRA misses the deadline, Geo Chem will have a much stronger basis to argue that its objection is deemed allowed.

At first sight the two Court of Appeal decisions point in different directions. One says pending proceedings do not stop the clock. The other says the clock does not run while litigation continues. They are consistent once the kind of proceedings is identified.

The distinction is between a threshold dispute and a collateral one:

• A threshold dispute concerns whether there is a valid objection at all. Until it is resolved, the 60-day period for a merits decision has not begun.

• A collateral dispute concerns other proceedings: another tax period, a related appeal or a parallel case. It gives the Commissioner no power to pause a clock that is already running.

For taxpayers, the practical lesson is clear. The strongest protection comes from lodging a valid objection first time: complete, with the documents the Tax Procedures Act requires. That starts the 60-day clock beyond argument, and the September ruling then prevents KRA from stopping it.

Decided before September, this judgment sets the evidential standard for every objection and appeal now being prepared. It is Income Tax Appeal E016 of 2024, [2026] KEHC 11141 (KLR), delivered by Justice Benjamin Njoroge at the Milimani Commercial Courts on 21 July 2026.

The facts. A KRA desk audit covering 2017 to 2020 found material differences between the purchases Jakoline declared in its corporation tax returns and those in its monthly VAT returns. For 2017 alone, the unreconciled purchase variance was KSh115,049,988. KRA raised additional assessments of KSh29,208,766: KSh14,478,939 in income tax and KSh14,729,827 in VAT.

The Tribunal's view. On 10 November 2023 the Tax Appeals Tribunal set the whole assessment aside. It held that by supplying bulk digital files, invoices and bank statements, the company had discharged its burden of proof, shifting to KRA the task of tracing the discrepancies.

The High Court's reversal. The court allowed KRA's appeal in full:

• The burden stays with the taxpayer. Section 56(1) of the Tax Procedures Act and section 30 of the Tax Appeals Tribunal Act place the burden of proving an assessment wrong on the taxpayer. This follows from self-assessment, in which the taxpayer holds the records.

• Records are not reconciliations. Where KRA identifies a specific, quantifiable difference between two of the taxpayer's own declarations, the taxpayer must explain that difference. In the court's words, "The taxpayer must provide a clear, specific, and indexed reconciliation."

• KRA is not a forensic accountant. It is not required to comb through unstructured material to build the taxpayer's case.

• The evidence failed on its own terms. Asked for 2017 invoices and proof of payment, Jakoline supplied 2020 invoices. It said it made no exempt supplies, yet its invoices showed exempt items such as rice, maize and wheat flour. And it gave no schedules matching bank entries to individual transactions.

The court reinstated KRA's objection decision of 29 August 2022 confirming the KSh29.2 million assessment. Each party bore its own costs.

Why it matters. The judgment rejects the practice of answering an audit with volume. A successful objection now needs a reconciliation that starts from KRA's specific variance and walks through to the supporting documents, period by period.

1. Lodge a valid objection the first time. Include the grounds, the amount of tax you accept, and the supporting documents the Tax Procedures Act requires. A valid objection starts the 60-day clock beyond argument. An objection KRA can call invalid can stall it for years, as Geo Chem shows.

2. Diary the 60 days and act on day 61. Record the date the objection was lodged and when the 60 days expire. If no decision has issued, write to KRA recording that the objection is deemed allowed under section 51(11). Do not accept an explanation that KRA is waiting for other proceedings.

3. Choose the right forum. Where KRA has made a decision you disagree with, the route is the Tax Appeals Tribunal. Where KRA has failed to make any decision at all, the Court of Appeal has confirmed that judicial review in the High Court is available. Judicial review cannot, however, be used to force payment of a refund whose entitlement is still disputed.

4. Build reconciliations, not data dumps. After Jakoline, every objection should include:

• a reconciliation starting from the exact variance KRA has identified, period by period;

• schedules linking bank entries to individual invoices and returns;

• an index cross-referencing each document to the line item it supports; and

• documents from the correct period only.

5. Check consistency across tax heads. The Jakoline assessment came from comparing the company's own corporation tax and VAT returns. With data-driven audits, KRA can run the same comparison on any taxpayer. Reconciling income tax, VAT and withholding declarations before filing is the cheapest defence.

6. Refund claimants have a new lever. Taxpayers with long-outstanding VAT refunds can rely on the September ruling to insist that statutory timelines run regardless of unrelated litigation.

What happens if KRA does not decide my tax objection within 60 days? Under section 51(11) of the Tax Procedures Act, if the Commissioner does not issue an objection decision within 60 days of a validly lodged objection, the objection is deemed allowed.

Can KRA delay a decision because related cases are pending? No. In its 16 September 2026 ruling, the Court of Appeal held that the Commissioner cannot suspend statutory deadlines to await the outcome of collateral proceedings.

When does the 60-day period start if KRA says my objection is invalid? According to the Court of Appeal in the Geo Chem Middle East case, if the validity finding is challenged and overturned, the 60 days begin only once that validity dispute is finally determined.

Can I go straight to the High Court against KRA? Only in limited cases. Where KRA has made no decision within the statutory time, judicial review is available. Disputes about whether a decision is correct must go through the objection and Tax Appeals Tribunal process.

What evidence do I need to dispute a KRA assessment? After Jakoline Enterprises, a clear, specific and indexed reconciliation that explains the exact variance KRA identified. Bulk, unorganised records do not discharge the taxpayer's burden of proof.