Kenya’s High Court is set to examine a provision of the Tax Procedures Act that places the burden of proof on taxpayers in disputes with the Kenya Revenue Authority, following a petition filed by a Nakuru-based doctor challenging its constitutionality. Dr Magare Gikenyi is seeking to have Section 56(1) of the Act struck out, arguing that it unfairly treats KRA tax assessments as correct unless a taxpayer can prove otherwise.
How the rule works
Section 56(1) of the Tax Procedures Act, read together with Section 30 of the Tax Appeals Tribunal Act, establishes what tax lawyers describe as a presumption of correctness. Once KRA issues an assessment, often after an audit or investigation, the law assumes the figure is accurate. If a taxpayer objects, it is their responsibility to prove that the assessment is wrong.
In practical terms, taxpayers must support their filings with extensive documentation, including invoices, receipts, contracts, bank statements, and transaction records. Where records are incomplete or unavailable, tribunals and courts have generally upheld KRA’s position. The rule applies across income tax, value-added tax, and excise duty, and is enforced both during objections lodged with KRA and in appeals before the Tax Appeals Tribunal and the courts.
Why the law is structured this way
The government’s rationale for structuring the law this way rests on enforcement and administration. Kenya operates a self-assessment tax system, under which taxpayers declare their own liabilities before KRA reviews or audits them. Placing the burden of proof on taxpayers is intended to support compliance, encourage proper record-keeping, and protect revenue collection by reducing the risk of under-reporting and prolonged disputes.
When the burden can shift
Courts, however, have held that the burden is not absolute. Once a taxpayer produces credible, prima facie evidence in support of their position, the evidentiary burden can shift back to KRA. At that stage, the authority is expected to explain how it arrived at its assessment, point out specific inconsistencies, or justify any adjustments made. Many disputes turn on whether the taxpayer’s evidence meets this threshold. Where documentation is considered insufficient or unreliable, the assessment is typically upheld.
Cases that illustrate the rule
In 2021, the Tax Appeals Tribunal upheld assessments against Paleah Stores Limited amounting to Ksh 9.3 billion for the 2008–2014 period after the retailer failed to produce adequate records to counter KRA’s findings. In late 2025, the High Court ordered a construction firm accused of missing trader fraud to pay Ksh 773 million after it failed to demonstrate the transactional reality of its supplies, citing the absence of delivery notes and transport documentation. Appeals by Digital Box Limited and Tumaini Distributors Company (K) Limited were also dismissed after the taxpayers failed to provide primary source documents or meet procedural requirements.
Why Dr Gikenyi is challenging it
Dr Gikenyi’s challenge argues that KRA’s “You Prove Us Wrong” Tax Rule conflicts with constitutional protections, including the presumption of innocence and the right to a fair hearing under Article 50. In his petition, he contends that the rule forces taxpayers to defend themselves against assessments that may lack clear justification, effectively requiring them to disprove figures set by the authority.
He also points to the interaction between the burden-of-proof rule and penalties for non-payment, which can escalate disputes into criminal exposure if assessed taxes remain unpaid. According to his filing, this structure places pressure on taxpayers to settle disputes even where assessments are contested, and creates scope for abuse.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.