KRA sues Chinese smartphone firm for tax evasion

The taxman has taken a Chinese smartphone company to court for allegedly not paying tax on its imported products.

In the suit, the Kenya Revenue Authority wants the bank accounts of X-Tigi Technology Company Ltd frozen.

Through lawyer Sylvester Ogello, the KRA claims the company has not been declaring taxes as required by law, and, therefore, the taxman intends to assess its income.

In the case documents, the KRA also claims that the company’s director, Mr Gao Fei, is a foreigner (Chinese), who might frustrate the recovery of the tax owed or may have money in four Equity Bank accounts withdrawn or transferred elsewhere.

They also accuse him of running a United States-dollar account with considerable deposits and regular funds transfers to another bank account in Hong Kong, which, the KRA suspects to be the income derived from the business.

“We request that this court issue an order preserving the funds and prohibiting the transfer, withdrawal or disposal of the monies in the said accounts, pending the assessment of the income for purposes of taxation,” Mr Ogello said.

In the event the court does not issue orders to freeze the company’s bank accounts as requested, the KRA wants directions issued to impose security for the taxes that will be found to be due.

The taxman wants the case certified urgent and heard on a priority basis.

According to a KRA official, they learnt that the company is the sole distributor of the X-Tigi mobile phones, chargers, phone covers, earphones and other accessories, which are widely circulated in the Kenyan market.

The official claimed the company may be owing colossal amounts that may be impossible to recover should the court fail to intervene, considering that its director is not resident in Kenya.