KRA hunts for 600 tax cheats as it seeks to recover Sh15b

Kenya Revenue Authority (KRA) Deputy Commissioner in charge of Research, Knowledge Management and Corporate Planning Joseline Ogai (right) with Deputy Commissioner Corporate Policy Maurice Oray during a press briefing on KRA's revenue performance in the last financial year in Nairobi yesterday. [Wilberforce Okwiri, Standard]

The Kenya Revenue Authority (KRA) expects to charge 600 suspected tax cheats in the next 12 months as it moves to recover lost revenue.

Consequently, the taxman hopes to recover Sh15 billion, mostly through plea bargaining, where the suspects agree to pay the money in exchange for amnesty.

This comes at a time when the tax authority has upped the ante in the hunt for tax evaders, with billionaire businessman Humphrey Kariuki the latest to be caught by KRA's dragnet.

The founder of Africa Spirits, the alcoholic beverage maker at the centre of suspected Sh41 billion tax fraud, has since distanced himself from the management of the firm.

“We have a 94 per cent success rate on these cases, and we want all our cases publicised,” said Dr Edward Karanja, KRA’s head of tax investigations at a briefing on the authority’s annual revenue performance in Nairobi yesterday.

With the private sector struggling amid a tough operating environment, the taxman has found it even harder to meet its targets.

KRA has, in turn, had to rely on tax compliance, which is the degree to which a taxpayer complies by declaring their income, filing a return and paying the tax due in a timely manner.

Of the eight million registered taxpayers - from 20 million adults - KRA believes there are still many Kenyans in the tax bracket who are not paying their fair share of taxes.  

Deputy Commissioner Strategy, Innovation and Risk Management Joseline Ogai said the recent campaign against tax evasion should not be construed to mean the tax agency is targeting individuals but that it is only trying to ensure tax compliance which is a legal requirement.

Mr Ogayi noted that with growth in most tax heads, including value-added tax (VAT) and employees’ pay-as-you-earn (PAYE) underperforming, the taxman is going to ensure that every eligible individual is roped into the tax net.

In the financial year 2018/19, KRA was able to recover Sh8.3 billion from a target of Sh10 billion.

“The case that was successfully investigated involved suspects who were charged in court for evading payment of Sh7 billion in value-added tax (VAT) and income taxes,” said the head of tax investigations Karanja.

According to KRA, the suspects had registered more than nine business names and used them to make fictitious invoicing in excess of Sh15.3 billion.

There was also a case of misdeclaration of a shipment of high-Value tobacco originating from Mumbai, India which was booked as cereals.

Over the period, KRA assessed taxes to be recovered of about Sh300 million.