A top lawyer is embroiled in a suspected taxation fraud involving Sh378 million, which includes un-remitted employees’ income tax in a matter before court.
Prof Tom Ojienda, also a member of the Judicial Service Commission (JSC), has effectively been branded tax non-compliant and had his request for conformity certificate turned down.
The Kenya Revenue Authority says the lawyer has evaded tax on his income as legal fees estimated at Sh1.1 billion received from Mumias Sugar Company and the Nairobi County Government.
“KRA has a payroll that he (Prof Ojienda) never deducted and remitted his employees’ income tax as required by the law,” James Mburu, a deputy commissioner of KRA, says in an affidavit filed in court last week.
It is impossible to tell from the court documents the size of Prof Tom Ojienda and Associates’ staff, whose unremitted income taxes — also known as Pay As You Earn — forms the basis of the suit.
Taxes accruing from payments received by the firm as settlements for legal fees were under-declared in the annual personal returns filed by the lawyer, KRA says.
Mburu’s affidavit is a response to a suit filed by Ojienda seeking to have KRA barred from demanding the back taxes, saying the claim was discriminative and driven by malice.
Ojienda says in the original application that some of the funds in the bank accounts audited for tax assessment by KRA were not his income, but rather clients’ money held in trust.
“KRA acted illegally by purporting to assess the applicants’ clients’ accounts for taxation wherein they contain clients’ money,” reads Ojienda’s petition.
He has since sought intervention of John Njiraini, the Commissioner General of KRA, claiming his offices in Nakuru were raided by officers from the tax authority who also arrested his workers.
But in the ensuing court filings, the tax agency says there was no documentation to support Ojienda’s claims that funds in the bank account belonged to his clients.
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“...the said documents did not demonstrate instances when allowances, clients’ money and disbursements were deposited into the accounts claimed to be client accounts as had been requested to enable the KRA amend the assessments appropriately,” Mburu says.
Mburu says the law professor had attacked him personally in the instance where Ojienda claimed the tax claim and subsequent alleged harassment smacked of ethnic bias.
Counter-accusation between Mburu and Ojienda of malice are turning out to be an interesting sideshow to the suit that has also drawn in Dr Robert Ayisi, the Nairobi County Secretary, who claims to have been frog-marched by KRA officers.
Ayisi was arrested allegedly for declining to reveal crucial information to KRA on the payments made by the county to Ojienda and his law firm.
He has since sued for harassment and humiliation, following his arrest and brief detention at the Times Tower — KRA’s head offices along Haile Selassie Avenue.
He sued KRA in the Constitution and Human Rights Division of the High Court three weeks ago, seeking protection from the revenue agency.
No directions have been issued on the matter, pending its determination.
Two officers from the Criminal Investigations Department attached to the KRA arrested Ayisi from his office at City Hall on October 4, before frog-marching him to Times Tower.
The arrest came following months of correspondence where Ayisi, as the Nairobi County Secretary, had been requested to share information relating to the payments made to Ojiendaand his law firm.
Ojienda, acting for Ayisi in the suit, says in his submission that his client was “rushed, frog-matched (sic) and harassed through the streets like a cheap criminal to the dismay of onlookers”.
Before the arrest, KRA claims it had been frustrated by Ayisi who claimed he could not trace the required documents relating to payments to Ojienda since they were yet to be returned by the Ethics and Anti-Corruption Commission, even though he later said the required information was confidential.
KRA says in the court papers that Ayisi was “guilty of material non-disclosure”, yet it was the body mandated by the law to ensure everyone pays their fair share of taxes.