The Kenya Revenue Authority (KRA) more than doubled revenue collected through negotiated tax dispute settlements to Sh35.06 billion in the financial year ended June after concluding 993 cases, marking a strong recovery from last year’s sharp decline.
According to KRA data, collections through the Alternative Dispute Resolution (ADR) programme increased from Sh15.3 billion recorded in the 2024/25 financial year to Sh35.06 billion in the 2025/26 financial year, representing a 129.22 per cent rise.
The increase followed a rise in the number of disputes concluded, with the authority settling 993 cases compared to only 97 cases in the previous financial year.
“Alternative Dispute Resolution (ADR) remained a key mechanism for resolving tax disputes efficiently, with 993 cases concluded, yielding KES 35.062 billion in revenue,” Commissioner General Adan Mohamed said in KRA’s annual performance report.
However, despite the improvement, the collections remained below the levels recorded in earlier years, with the latest figure standing about 42 per cent lower than the Sh60.47 billion collected in 2023/24 and less than half of the Sh71.84 billion realised in 2022/23.
The ADR programme allows taxpayers and KRA to resolve tax disputes through negotiations instead of taking the matters through lengthy cases before the Tax Appeals Tribunal or courts. The process helps the authority unlock disputed revenue faster while reducing legal costs for both parties.
The latest recovery comes after a difficult 2024/25 financial year when ADR performance dropped sharply. During that period, the number of concluded cases fell to 97 from 6,776 recorded the previous year, while collections declined to Sh15.3 billion from Sh60.47 billion.
The new figures show that KRA has revived the programme, although the number of disputes being processed remains below previous levels. In the 2022/23 financial year, the authority concluded 7,458 ADR cases that generated Sh71.84 billion.
The increase in resolved disputes also outpaced revenue growth, indicating that the average value of disputes settled through ADR reduced as KRA handled more cases.
KRA data shows the average revenue collected from each settled dispute dropped to about Sh35 million in the latest financial year from about Sh158 million in 2024/25, suggesting that many of the disputes resolved were smaller in value.
The improved performance comes as KRA continues to strengthen tax compliance efforts through faster dispute resolution, technology and the use of data to improve tax administration.
The authority has increased the use of third-party data, electronic tax invoices and transaction matching systems to identify differences between taxpayers’ declared income and their actual business activities.
Where audits or additional tax assessments result in disputes, ADR gives taxpayers an opportunity to negotiate settlements with KRA before cases proceed to the Tax Appeals Tribunal or courts.
The programme complements KRA’s wider compliance strategy, which also saw the authority collect a record Sh144.82 billion from outstanding tax debts through follow-up on unpaid assessments and instalment payment plans agreed with taxpayers.
KRA has continued combining negotiated settlements with enforcement measures by using digital tools to identify taxpayers who are not complying with tax obligations while encouraging those willing to cooperate to resolve disputes through ADR.
Negotiated settlements help reduce uncertainty, legal costs and the time involved in lengthy tax cases, allowing businesses to focus on operations while regularising their tax affairs.
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