High Court rules in favour of KRA in Sh1.1 billion tax dispute, orders fresh tribunal hearing
The Tax Appeals Tribunal ruled in Zhao's favour, finding that the 60-day period within which KRA was required to issue its objection decision should have been calculated from the date of the initial email objection.
The High Court in Nairobi has ruled that the Kenya Revenue Authority (KRA) acted within the law in issuing a tax objection decision against a Chinese national, Hanqing Zhao, in a dispute involving more than Sh1.1 billion in alleged unpaid taxes.
Justice Moses Ado, sitting at the Milimani Commercial and Tax Division, overturned a ruling by the Tax Appeals Tribunal (TAT) that had declared KRA's objection decision invalid for being filed outside statutory timelines. However, the judge directed that the matter be sent back to the tribunal for a fresh hearing on its merits.
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The case stemmed from a tax assessment notice issued by the Commissioner of Domestic Taxes on September 7, 2023, demanding Sh1,136,144,299 from Zhao for the period between 2018 and 2023.
Zhao challenged the assessment through an objection letter dated September 29, 2023, which he sent to KRA officers via email.
KRA, however, maintained that the objection was not properly filed since it was not lodged through the official iTax system. The authority later allowed Zhao to submit a formal objection on November 30, 2023, through the online platform.
KRA subsequently issued its objection decision on January 29, 2024, slightly revising the tax downwards to Sh1.13 billion.
The Tax Appeals Tribunal ruled in Zhao's favour, finding that the 60-day period within which KRA was required to issue its objection decision should have been calculated from the date of the initial email objection.
The tribunal held that the Commissioner's decision was, therefore, late and deemed the objection automatically allowed by operation of law.
But in his October 27, 2025, judgment, Justice Ado disagreed. He held that only objections lodged through iTax are legally valid and capable of generating an auditable trail as required by the Tax Procedures Act.
"The letter dated September 29, 2023, transmitted through personal email, did not constitute a valid notice of objection under Section 51 of the Tax Procedures Act," he ruled.
"The proper computation of time commenced on 30th November 2023, when the Respondent validly lodged its objection through the iTax system."
Justice Ado set aside the tribunal's decision but declined to uphold KRA's objection decision as final, citing the need for fairness and substantive justice. He remitted the case back to the TAT for a fresh hearing, directing that each party bear its own costs.
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