General

The billionaires cartel denying KRA Sh200 billion in tax

A club of wealthy Kenyans and dubious companies are denying the Kenya Revenue Authority (KRA) more than Sh200 billion through funny suits at the appeals tribunal.

KRA Commissioner-General Githii Mburu has thrown in the towel admitting that the authority has witnessed a surge in taxpayers challenging notices for unpaid duty at the Tax Appeals Tribunal (TAT).

Thie notices have ended up stalling enforcement actions that include freezing of assets, deactivation of Personal Identification Numbers (PINs), and travel bans.

Mburu also admitted that KRA has no prosecutions that have ultimately lead to payment of unpaid taxes.

This is despite publicized crackdown on wealthy looters with dubious companies in a bid to increase its tax collections where thousands of cheats and tax evaders have been netted and set free.

The crackdown on tax cheats is coming after the tribunal is witnessed an increase of 31% of cases filed. The suits stood at 408 in January.

“At the tax appeals tribunal, we have over Sh200 billion there, we want those disputes resolved and those taxpayers come forward through alternative dispute resolution,” Mburu said.

KRA can not enforce strict measures at the tribunal as contained in the Tax Procedures Act of 2015, which allows the authority to issue travel bans on  tax cheats, collect duty directly from suppliers and bankers of defaulters and prosecute those the ones with arrears.

The taxman has never hit it’s target in along time resulting into a  deteriorated cash-flow and falling revenues that has worsened debt service obligations.

KRA continues to fail even after changing tacts including now that they are persuading firms and high-net worth persons to turn to Alternative Dispute Resolution (ADR) or settlement of disputes outside court and TAT.

ADR means the disputes will be swiftly settled within the KRA and the taxman will collect the ‘negotiated taxes’.

“We will allow them (individuals and businesses) repayment plans and if they are not going to pay everything together, we are going to be as accommodative as possible,” Mr Mburu said.

KRA also promised tax cheat that cases under the ADR must be resolved within 90 days.

Tax collections had dropped by 14.69%  to Sh317.6 billion in June raising fears Kenya’s budget deficit for 2020/21 may bulge due to revenue shortfall.

Detectives from the authority are aware of 1,309 firms and wealthy individuals that owe KRA billions of shillings.

KRA is also aware of  tax evasion schemes employed by these criminals which include filing of fictitious value-added tax (VAT) invoices to evade taxes that run into billions of shillings.

The taxman also said that these firms fake invoices to inflate purchases of inputs in a bid to cut their VAT obligations.

Most of these firms that are in construction, importation of hardware and household goods, scrap metal dealers and importers of electronic items have been flagged by KRA for under-declaring VAT dues.

Wealthy cons hide their sources of income while engaging in luxury spendings, high-end cars and in property acquisition.

The KRA enforcement unit relies on bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA) to trace their records.

Car registration details help in smoking out owners of high-end cars who remit peanuts in tax.

KRA uses Kenya Power meter registrations to identify landlords whom they slap with heavy taxes.

Some crooks bribe KRA officers to underwrite their  insurance policies, customs clearing and forwarding, payment of deposits for power connections, supplying goods and services to the State and opening accounts with banks.

 

About the author

Cyprian, Is Nyakundi

Cyprian is a blogger who has an interest in politics, news, current affairs, people and anything that is of interest to society. My aim is to inform and update readers with the most accurate information.

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