Tax Decision v Appealable Decision: Avoiding Pitfalls in Tax Disputes
Written by Sharon Chepkwony
TAX DECISION & APPEALABLE DECISIONS
Why the Distinction Matters
The Tax Procedures Act (TPA) sets out two distinct categories of decisions issued by the Kenya Revenue Authority (KRA): tax decisions and appealable decisions. Knowing the difference determines whether a taxpayer must first lodge an objection or whether they can proceed directly to the Tax Appeals Tribunal (TAT).
Getting this wrong is not a mere technicality. As the case law below demonstrates, taking the wrong procedural route can see an entire dispute struck out for want of jurisdiction, or a taxpayer locked out of an appeal altogether by the running of time.
What Is a Tax Decision?
Section 3 of the TPA defines a tax decision as any of the following:
An assessment: This ordinarily entails KRA communicating that information available to it indicates that the taxpayer is liable to pay a specified amount of tax.
A determination under section 17(2) of the amount of tax payable or what will become payable by a taxpayer: Section 17 covers instances where KRA may inform an appointed person (an administrator, personal representative, executor of a will, trustee-in-bankruptcy, receiver, or liquidator) that an amount of tax is payable by a taxpayer whose assets are under that person's control.
A determination of the amount that a tax representative, appointed person, director, or controlling member is liable for under sections 15, 17, and 18: Sections 15 and 18 similarly cover instances where a tax representative is liable for payment of tax on behalf of a particular taxpayer, for example, guardians where a taxpayer is an individual under a legal disability, or a trustee in the case of a trust.
A decision on an application by a self-assessment taxpayer under section 31(2): Section 31(2) allows a taxpayer who has made a self-assessment (i.e., filed returns that ultimately indicate the amount of tax payable) to apply to KRA within five years to amend that self-assessment.
A decision under section 48 requiring repayment of a refund: Section 48 covers a situation where KRA has erroneously refunded tax and subsequently makes a demand for repayment from the taxpayer.
A demand for a penalty or late payment interest: This simply relates to penalties imposed and interest charged on outstanding tax liabilities.
What Is an Appealable Decision?
On the other hand, an appealable decision means an objection decision, and any other decision made under a tax law other than a tax decision or a decision made in the course of making a tax decision.
THE DISTINGUISHING FACTOR
The difference between a tax decision and an appealable decision lies in the action to be taken following receipt of either decision:
When a taxpayer receives a tax decision, the next step is to lodge a Notice of Objection with KRA's Independent Review of Objections (IRO) department.
Once IRO considers the Notice of Objection, an Objection Decision is issued. This constitutes an appealable decision, which the taxpayer can then challenge by lodging an appeal at the TAT.
The issue arises when a taxpayer receives a tax decision and, instead of first lodging a Notice of Objection, bypasses the objection stage and files an appeal directly at the TAT. Because the definition of an appealable decision in the TPA specifically excludes tax decisions, lodging an appeal against a tax decision at the TAT raises a jurisdictional issue and risks the appeal being struck out as premature.
SPECIAL CASES
Refunds Under Section 47 of the TPA
The procedure for refund applications is slightly different. Section 47 of the TPA sets it out as follows:
A taxpayer applies for a refund of overpaid taxes, or for an offset of the overpaid taxes against outstanding tax debt and future tax liabilities.
The Commissioner ascertains and determines the application within 120 days and issues a refund decision.
Where the taxpayer is aggrieved by the Commissioner's decision, they may appeal to the TAT within 30 days of being notified.
This means a taxpayer does not need to lodge an objection challenging a refund decision. Instead, under Section 47(13) of the TPA, they are required to appeal directly against the refund decision.
SIGNIFICANCE OF THE DECISION
Customs Procedure
Customs disputes are governed by a different statute altogether. The East African Community Customs Management Act (EACCMA). Sections 229 and 230 of the EACCMA provide the following procedure:
A person aggrieved by the Commissioner's actions or omissions may apply for a review of the Commissioner's decision within 30 days of that decision. This application is lodged with the Commissioner.
The Commissioner is required to issue a review decision within 30 days.
Should the taxpayer disagree with the review decision, they may lodge an appeal at the TAT within 45 days from the date of receipt of the review decision.
Jurisprudence from the Tax Appeals Tribunal and High Court
The TAT and the High Court have, in recent decisions, continued to grapple with and refine the line between a tax decision and an appealable decision.
KRA's rejection of a request for renewal of an Exemption Certificate is an appealable decision
Saleh Mohammed Trust v Commissioner of Domestic Taxes(Income Tax Appeal E221 of 2023) [2025] KEHC 2169 (KLR)
The taxpayer applied for renewal of its tax exemption certificate. KRA declined to renew it, prompting the taxpayer to lodge an appeal at the TAT. KRA filed a preliminary objection challenging the TAT's jurisdiction, arguing that the rejection was not an appealable decision. The TAT agreed with KRA, holding that the appeal was premature.
The High Court, however, overturned the TAT's decision and referred the matter back for hearing and determination. Applying the plain meaning rule of statutory interpretation, the Court held that KRA's rejection of the application was neither a tax decision nor a decision made in the course of making a tax decision. It fell instead within "any other decision under a tax law," and was therefore an appealable decision.
KRA's decision declining to allow an application for amendment of returns is a tax decision, not an appealable decision
Samawati Capital Partners Limited v Commissioner Legal Services and Board Coordination (TAT MISC No. E058 of 2025)
The taxpayer filed an application seeking to compel KRA to approve the amendment of its VAT returns for February 2019 to January 2024 under Section 31 of the TPA. KRA argued that a decision on such an application is not an appealable decision, but rather a tax decision.
The TAT agreed, holding that its jurisdiction is limited to appealable decisions as defined under Section 52(1) of the TPA and Section 12 of the Tax Appeals Tribunal Act. The taxpayer's application was struck out.
A system restriction on iTax barring an offset of overpaid taxes against future liabilities is not an appealable decision
Apex Communications Limited v Commissioner of Domestic Taxes(Miscellaneous Application E104 of 2023) [2023] KETAT 634 (KLR)
The taxpayer applied to the TAT for orders compelling KRA to remove a system restriction on its iTax platform that barred it from offsetting overpaid Corporation Tax for 2015 against current and future liabilities.
The TAT held that this fell within the scope of a tax decision, and that the appeal was therefore premature. The Tribunal could not "turn a blind eye" to the objection process laid down under the TPA.
An agency notice is an appealable decision
Krystalline Salt Limited v Kenya Revenue Authority[2019] KEHC 6939 (KLR)
KRA issued an agency notice under Section 42, declaring the applicant a payer of taxes due from Water Resources Management Ltd. The applicant sought judicial review, applying for an order of certiorari quashing the notice and prohibiting KRA from issuing agency notices to its bankers.
The High Court found that the application offended the doctrine of exhaustion, since the applicant ought to have first sought a remedy at the TAT. In the Court's view, an agency notice falls squarely within the definition of "any other decision made under a tax law."
An agency notice is an appealable decision (reaffirmed)
Apex Communications Limited v Commissioner of Domestic Taxes(Tax Appeal E902 of 2023) [2024] KETAT 1659 (KLR)
The taxpayer sought to offset overpaid corporate taxes against future tax liabilities. KRA issued a system notice advising that the offset application ought to have been made within five years. The taxpayer lodged an objection during the pendency of a mandamus application at the Tribunal, and KRA issued an objection decision declining the objection, prompting an appeal.
The TAT held that the taxpayer ought to have appealed against KRA's earlier decision declining the offset application directly. By instead lodging an objection and waiting for an objection decision, the taxpayer ran out of time to appeal under Section 47(13) of the TPA. The TAT clarified that a decision made under Section 47 is an appealable decision by virtue of Section 47(13).
A decision on the modalities of implementing a Refund Decision is not an appealable decision
Nabo Africa Funds v Commissioner of Domestic Taxes(Tax Appeal E334 of 2024) [2025] KETAT 141 (KLR)
The taxpayer lodged an Income Tax refund claim. KRA approved the claim in full but, instead of disbursing the amount, issued a refund adjustment voucher (RAV) permitting the taxpayer to set off the approved amount against pending and future tax liabilities. The taxpayer appealed against the issuance of the RAV, being tax-exempt and therefore unable to utilise the refund.
The TAT found that the initial decision allowing the refund claim was the Refund Decision. The subsequent issuance of the RAV, however, was not an appealable decision — the modalities and mechanics of implementing a Refund Decision do not themselves constitute the Refund Decision.
Conclusion
While every decision on tax issues may impact a taxpayer, not every decision is immediately appealable. The law draws a clear line: a "tax decision" is any determination by the Commissioner on a tax matter, but only certain decisions expressly provided for under the Tax Procedures Act qualify as "appealable decisions." Understanding this distinction, and the special regimes that apply to refunds and customs matters, is crucial to identifying the correct recourse available to a taxpayer, and to avoiding the costly pitfall of a dispute being struck out on jurisdictional grounds.
For additional information regarding this or other tax-related matters, please contact us at info@memaadvocatesllp.com.
