In Kenya’s dynamic fiscal landscape, where the expansion of the tax net is both a policy objective and a constitutional imperative, the fairness of tax administration remains a pivotal concern. Nowhere is this more evident than in the arena of tax dispute resolution, where the placement of the burden of proof often becomes the fulcrum upon which justice, equity, and administrative efficiency turn.
The prevailing legal architecture places this burden squarely on the taxpayer, creating a tension between statutory presumptions, constitutional guarantees, and practical realities.
This article undertakes a comprehensive and contemporary analysis of the burden of proof in tax disputes in Kenya, drawing from jurisprudence, constitutional and statutory frameworks, comparative international models, and evolving economic contexts.
The Legal Framework: Statutory Presumption and Constitutional Challenge
Section 56(1) of the Tax Procedures Act, 2015 provides that “in any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.” This is further echoed in Section 30 of the Tax Appeals Tribunal Act, which mandates that the appellant-typically the taxpayer-bears the onus of demonstrating that an assessment or decision of the Commissioner is excessive or wrong.
This statutory framework operates against the backdrop of the Constitution of Kenya, 2010. Article 47 guarantees every person the right to fair administrative action that is “expeditious, efficient, lawful, reasonable and procedurally fair.”
Article 50 further enshrines the right to a fair hearing, including in matters of a civil nature. When a taxpayer disputes an assessment that has been issued with little or no explanation, or where enforcement measures commence without adequate notice or justification, these constitutional guarantees come under pressure.
The Fair Administrative Action Act, 2015 operationalizes Article 47. Section 4 of the Act requires that administrative decisions affecting rights or legitimate expectations be accompanied by written reasons, while Section 6(4) places the burden on public bodies to demonstrate compliance with fair process when challenged. Thus, while the Tax Procedures Act imposes a substantive burden on the taxpayer, administrative law demands procedural accountability from the Kenya Revenue Authority (KRA).
Structural Inequities in Tax Dispute Resolution
In theory, the placement of the burden on the taxpayer is justified by the assumption that the taxpayer possesses or controls the relevant records, accounts, and transactional data that underlie their returns. In practice, however, this burden is often onerous, particularly for small and medium-sized enterprises (SMEs), individuals, and informal sector players who lack sophisticated financial systems or the resources to engage tax experts.
The inequality is not merely about financial capacity. The KRA, as a powerful state agency, enjoys wide-ranging statutory powers under the Tax Procedures Act, including the power to demand information, conduct audits, access bank records, impose penalties, and even carry out searches and seizures. When pitted against this institutional muscle, an ordinary taxpayer may find it practically impossible to prove the negative - that an assessment made against them is incorrect - particularly where the KRA provides minimal or no reasoning for its assessment.
In Trueblaq Ltd v Commissioner of Domestic Taxes (Tax Appeal No. 3 of 2025), the Tax Appeals Tribunal affirmed the presumption of correctness in the KRA’s assessments, stating that “the burden rests with the taxpayer to disprove the Commissioner’s decision, regardless of how minimal the justification provided.” This decision exemplifies the systemic challenge faced by taxpayers seeking to overturn tax decisions.
Evolving Jurisprudence: Signs of Flexibility and Fairness
Despite the rigidity of statutory text, Kenyan jurisprudence has in recent years shown signs of a more nuanced approach. Courts and tribunals have begun to differentiate between the legal burden of proof - which remains with the taxpayer - and the evidentiary burden, which may shift depending on the circumstances of the case.
In Wilken Aviation Ltd v Commissioner of Domestic Taxes (Tax Appeal No. 198 of 2024), the Tribunal observed that “while the taxpayer bears the legal burden of proof, once a prima facie case is established, the evidentiary burden may shift to the Commissioner to rebut that evidence.” The Tribunal found in favor of the taxpayer, noting that KRA had failed to sufficiently explain the methodology behind a contested lifestyle audit.
Similarly, in Greif East Africa Ltd v Commissioner of Domestic Taxes (Tax Appeal No. 435 of 2023), the taxpayer contested an assessment based on discrepancies arising from the iTax platform. The Tribunal emphasized that where the Commissioner relies on automated systems or estimations, it must provide the taxpayer with clear disclosure of the data and methodology used. The lack of transparency was held to be inconsistent with Article 47 of the Constitution and Section 4 of the Fair Administrative Action Act.
The High Court has also weighed in on constitutional dimensions of tax enforcement. In Macager & 23 others v Kenya Revenue Authority [2024] eKLR, the petitioners challenged KRA’s power to access personal financial data without court oversight. While the Court upheld the relevant provisions of the Tax Procedures Act, it emphasized that any intrusion must be justified, proportionate, and consistent with Article 31 on the right to privacy.
These decisions collectively suggest a judicial trend toward a more balanced evidentiary regime, particularly where taxpayer rights are at stake and the KRA’s decisions are opaque or intrusive.
Contextual Realities: Kenya’s Hybrid Economic Terrain
While Kenya has made significant progress in digitalizing aspects of its economy - most notably through mobile money (such as M-Pesa, Airtel Money), online banking, and electronic tax systems - large segments of commerce remain informal or poorly documented. The push by KRA to onboard all VAT-registered taxpayers onto the Electronic Tax Invoice Management System (ETIMS) is laudable, but implementation gaps and uneven digital access persist.
Thus, while digital records can facilitate evidence in tax disputes, over-reliance on electronic infrastructure could inadvertently penalize taxpayers in rural or marginalized areas. It also assumes uniform capacity to maintain electronic records - an assumption that does not hold across all economic sectors.
This duality complicates the evidentiary burden. For example, in St. Theresa Industries Ltd v Commissioner of Domestic Taxes (Tax Appeal No. E246 of 2023), the Tribunal recognized the challenges faced by SMEs in reconciling manual and digital records. It urged the KRA to adopt a “facilitative and collaborative” approach during audits, rather than defaulting to punitive presumptions.
Comparative Jurisdictions: Models for Balanced Evidentiary Rules
Kenya is not alone in grappling with how to balance administrative efficiency and taxpayer rights. Other jurisdictions have adopted models that offer useful guidance.
In the United Kingdom, the burden of proof generally lies with the taxpayer, but HM Revenue & Customs (HMRC) must prove certain claims - particularly where penalties, fraud, or estimates are involved. Courts have developed doctrines such as “legitimate expectation” and “proportionality” to moderate state power.
In the United States, while IRS assessments are presumed correct, the taxpayer’s production of credible evidence can shift the burden to the government. Where penalties or fraud are alleged, the IRS must prove its case by “clear and convincing evidence.”
South Africa adopts a bifurcated model: the taxpayer bears the general burden, but the South African Revenue Service (SARS) must prove the grounds for understatement penalties. The Tax Administration Act, 2011 also mandates SARS to act in a procedurally fair and transparent manner.
These jurisdictions demonstrate that evidentiary burdens in tax matters need not be absolute. Flexible, context-sensitive models - combined with clear procedural safeguards - can uphold revenue collection goals while preserving taxpayer rights.
Rethinking the Burden of Proof: Towards a Balanced Framework
A comprehensive reform of Kenya’s approach to the burden of proof in tax disputes requires both legislative and policy interventions. Such reform need not involve a complete reversal of the current regime but should introduce gradations and contextual calibrations.
a). Prima Facie Burden on KRA in Estimative or Penal Assessments: Where the KRA makes an assessment based on estimates, alternative methods, or issues penalties, it should bear an initial evidentiary burden to disclose the factual and legal basis of its decision. This would align with both the Fair Administrative Action Act and Article 47 of the Constitution.
b). Differentiation Based on Nature of Dispute: Disputes involving factual matters - such as whether certain expenses were incurred - may appropriately place the burden on the taxpayer. However, where legal interpretation or application of tax statutes is at issue, the KRA should bear the burden of demonstrating that its interpretation is reasonable and consistent with the law.
c). Procedural Enhancements in KRA Decision-Making: KRA should be required to accompany all tax decisions with clear, comprehensive reasons, including the basis of assessments, applicable provisions, and the right to object or appeal. This transparency not only empowers taxpayers but also strengthens the legitimacy of tax enforcement.
d). Legal Aid and Support Mechanisms for Taxpayers: To address the resource gap, the government should explore the establishment of tax clinics, pro bono schemes, or subsidized advisory services - particularly for SMEs and informal sector players. The Legal Aid Act, 2016 could be expanded to include tax dispute resolution within its mandate.
e). Legislative Reform: Amendments to the Tax Procedures Act and Tax Appeals Tribunal Act could codify shifting burdens in specified contexts. The Acts could also incorporate express recognition of constitutional rights and administrative law principles, bridging the current gap between tax law and rights-based jurisprudence.
Conclusion: Rebalancing Power, Enhancing Legitimacy
The allocation of the burden of proof in tax disputes is more than a procedural technicality - it is a reflection of the underlying power dynamics between the state and the citizen. In Kenya, the current model heavily favors the KRA, placing taxpayers at a disadvantage even before the merits of their case are considered.
Yet as jurisprudence, constitutional norms, and economic realities evolve, so too must the legal framework. A recalibrated model that recognizes both the taxpayer’s duty of disclosure and the state’s obligation to act fairly and transparently would serve Kenya’s broader goals of justice, compliance, and development.
Ultimately, rethinking the burden of proof is about restoring balance. It is about ensuring that the machinery of taxation does not crush the very citizens it seeks to serve. It is about embedding fairness at the heart of fiscal governance. And in doing so, it reaffirms the social contract upon which the legitimacy of taxation rests.
At International Consulting House LLP, we offer expert advisory in tax dispute resolution, fiscal structuring, cross-border profit repatriation planning, tax model optimization, and regulatory engagement across Kenya and beyond. Whether you're responding to complex assessments, navigating the Tax Procedures Act, or challenging administrative overreach, our team is equipped to support you with precision, strategy, and integrity.
In tax justice, balance matters. Let us help you level the playing field.
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