KRA investigating Chinese companies over tax evasion claims

KRA Commissioner General John Njiraini warned Chinese firms over tax evasion. [PHOTO: FILE/STANDARD]

Kenya: Kenya Revenue Authority (KRA) is investigating a number of Chinese companies suspected to be evading tax.

KRA Commissioner General John Njiraini said some Chinese-owned businesses may be denying the Government billions of shillings in tax through either under-declaration or mis-declaration of cargo.

“…I caution the Chinese business community to desist from activities that contravene tax or customs legal provisions either through under-declaration, mis-declaration or outright evasion of taxes,” said KRA Commissioner General John Njiraini, adding that a number of cases involving such malpractices are already under investigation.

“I urge the Chinese business community to observe ethical practices geared towards ensuring fair reporting of business activities and attendant payment of their rightful share of taxes.”

Mr Njiraini said punitive penalties including criminal prosecution would be preferred upon the culprits. He said more resources would be channelled towards this area in the coming months. Njiraini was speaking at a forum designed to facilitate greater dialogue between KRA and the Chinese Business Community in Kenya.

Increase trade

Official data from KRA’s shows imports from China grew by 25 per cent over the last three years, reaching a total of Sh165.3 billion in the 2012/13 financial year or the equivalent of 11.6 per cent of total imports.

 “These facts serve to demonstrate that Chinese businesses are poised to play an ever increasing role within the Kenyan economy in the years to come,” said Njiraini. He said the importance of China and the Chinese Business Community within Kenyan economy could not be overlooked. He said the impact of Chinese presence in the country could be felt in many sectors. These include public infrastructure, construction, real estate, manufacturing, machinery and equipment supply.

Other sectors that have attracted Chinese interest include telecommunications and at lower levels in wholesale and retail trade. Njiraini said the authority’s aim is to develop partnerships that facilitate greater understanding of tax matters by Chinese business people with a view to helping them achieve enhanced compliance levels.

“KRA’s long term objectives include the development of vibrant collaboration with our international counterparts for the purpose of knowledge sharing and transfer,” he said.

“In this regard we aim to develop linkages with China’s tax agencies including the State Administration of Taxation (SAT) and China Customs.”

He said the government’s plans to make Mombasa Port the pre-eminent gateway to Eastern Africa would open a floodgate of increased investment in technology.