Chinese investor barred from visiting parents over Sh83.5 million tax arrears

The High Court in Nairobi has allowed the Kenya Revenue Authority (KRA) to bar a Chinese investor from leaving Kenya to visit his parents in China over Sh83.5 million tax arrears.

Justice Lawrence Mugambi upheld a decision by KRA and the Director of Immigration barring Cai Jiupeng from leaving Kenya until he pays sh83,561,358 in tax arrears owed by Huiye Kenya Trading Co. Limited and Yingluo International Trading Co. Limited.

Justice Mugambi said the power of attorney and Juipeng's resultant actions of depositing and withdrawing money into the company's bank account are sufficient proof that he acted for and on behalf of the company.

"The Respondents (KRA) acted within their mandate in putting in motion preventive measures aimed at curbing possible losses of state's revenue through tax evasion considering that the Petitioner (Jiupeng) is a tax representative of a company that had a substantial amount of tax arrears," said Justice Mugambi

Jiupeng who has lived in Kenya since 2019 filed an appeal in the High Court seeking to stop KRA and Immigration from stopping his travel to China.

He accused KRA of unlawfully restraining him from leaving Kenya and that KRA's actions denied him an opportunity to visit and fend for his young family and elderly parents who are in China.

He said KRA through immigration issued a Departure Prohibition Order against him thereby curtailing his freedom of movement as enshrined under Article 39 of the Constitution and causing him substantial business loss.

Jiupeng denied being a director or controlling partner in any of the companies and that he was only a mere employee who is not in control of their revenue.

He termed the departure prohibition order as a shakedown by KRA instead of pursuing the controlling members or the representatives of the companies in question.

Jiupeng said that the power of attorney was invalid because there was undue influence when he was executing the same and further that the donor did not sign the power of attorney.

He said that he was coerced and influenced to sign the said power of attorney without understanding the impact thereof. However, according to KRA, Jiupeng filed nil returns although there were sales made by the company.

He was accused of failing to register for VAT obligation despite dealing with vatable sales that reached the threshold for VAT registration as required under Section 5 of the Value Added Tax Act, 2013.

KRA said that the investigations led to a reasonable ground to believe that Jiupeng being the tax representative of the said company was a flight risk and could leave Kenya without addressing the company's tax status as required by Section 15 of the Tax Procedures Act, 2015.

The taxman said it carried out tax investigations on Huiye Trading Company Limited following suspicious activities in its bank account.

KRA said that the investigation revealed that Jiupeng and Guo Wendong were nominated as the signatories of the Huiye Trading Company Limited bank account into which a deposit of sh67,373,900 and sh98,144,650 had been made respectively.

KRA said the power of attorney executed on April 1, 2019, and registered on April 5 2019 vested Jiupeng with the responsibilities of managing all the affairs of the company.

KRA said Jiupeng did not raise any complaints to discredit the power of attorney when it was used to open the bank accounts.