KRA takes on foreign companies evading tax

Mr. Ye Wei, the director of Housemart Company Limited, at a Milimani Court on October 11, 2018 where he was charged with three counts of tax evasion.

It has been a busy year for the Kenya Revenue Authority (KRA) as the agency cracks down on tax evaders, buoyed by new technology and stringent collection targets set by the National Treasury.

Over the past 12 months, KRA has filed legal claims against several large taxpayers seeking to claw back a record Sh20 billion in unpaid taxes, with some cases dating back to 2012.

At the same time, majority of the fraud cases the taxman lodged in 2018 involved foreign firms, painting a vivid picture of the schemes companies and auditors adopt to dodge taxes.

In April, Indian businessman Parmar Ranchodbhai was charged with evading more than Sh11 billion in income and value added tax (VAT) in one of the largest claims in KRA’s history.

Mr Ranchodbhai was accused of allegedly failing to declare Sh3.4 billion in VAT between 2015 and another Sh8 billion in VAT for 2016. The same week, the taxman was once again in court accusing businessmen Kevalkumar Navin Maisura and Arti Jagdiesh Bakrania of registering more than nine business names and making fictitious invoicing in excess of Sh15 billion.

Officers from KRA’s Investigations and Enforcement Department conducted a raid on the suspects’ premises and confiscated crucial documents and electronic devices, including ten ETR machines.

The taxman also sought to recover Sh2.2 billion in unremitted tax from Chinese firm Housemart Company.

KRA cited the importer of building and construction material and household goods for evading tax through under-declaring more than Sh3.2 billion in sales, translating to Sh517 million in VAT arrears.

Housemart Managing Director Ye Wei was charged on four counts of tax evasion using proxy companies for almost three years.

“On diverse dates between January 1, 2016 and June 30, 2017… being the managing director of Housemart Company Limited…willfully defaulted in paying Sh583.3 million being income tax payable to the Commissioner of Domestic Taxes in contravention of the said Act,” read one of the charges in the case filed at Milimani Court.