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18 arrested as KRA tightens the noose on the necks of tax cheats

Sunday December 30 2018

Charles Ongwae

Former Kenya Bureau of Standards managing director Charles Ongwae is among those facing the fresh charges of tax evasion. PHOTO | FILE | NATION MEDIA GROUP 

KENNEDY KIMANTHI
By KENNEDY KIMANTHI
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A presidential directive that Kenya Revenue Authority renews the drive to catch tax evaders appears to have gathered momentum after several individuals were arrested on Saturday for not paying their dues to the State.

More arrests are expected to be made in the coming days as Director of Public Prosecutions Noordin Haji directed that 18 individuals be charged with various offences relating to evasion and avoidance of tax payment which has over time led to perennial shortfall in KRA collections.

IMPORTED GOODS

Among those facing the fresh charges include former Kenya Bureau of Standards chief executive Charles Ongwae and former director of Quality Assurance Eric Kiptoo.

This comes against the backdrop of pressure for the government to pay its rising debts and fund its many projects as President Kenyatta’s second and final term in office gets under way.

In a statement, Mr Haji said two importers — Gendipe Enterprises and Rupai Trading Ltd and their clearing agent Landmark Freight Services Ltd — concealed imported goods with the aim of evading taxes and reducing amount of penalties payable for goods arriving without certificate of conformity from the country of origin.

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Investigations established that the two companies imported goods from Dubai which were declared to be imported machinery whose payable taxes are between 0-10 per cent.

But after re-verification of the containers, it was established they contained cooking oil and assorted dutiable goods whose import taxes range from 25-35 per cent of the total custom value.

According to Mr Haji, valuation confirmed that the actual taxes payable by Gendipe Enterprises and Rupai Trading Ltd were Sh7.1 million and Sh52 million, respectively.

“Further it was established that Gendipe Enterprises paid a penalty of Sh148,816 instead of the required Sh4.4 million while Rupai Trading Ltd paid a Sh148,300 penalty instead of Sh4.4 million,” DPP Haji said.

REVENUE COLLECTION

“In general, the country lost a total of Sh64, 944,112 that would have been received as revenue,” he continued.

The Tax Procedures Act says it is a crime for anyone to knowingly omit certain details when filing their tax returns. KRA acts by either suing the person or taking them to court for criminal trial.

KRA missed its revenue collection target for the 2017-2018 financial year by Sh172.4 billion.

It collected Sh1.48 trillion against a target of Sh1.65 trillion and last hit its collection target in the 2010-2011 financial year, when the then President Mwai Kibaki was nearing the end of his second term.

The taxman is banking on automated technology and corroboration with other law enforcement agencies to eliminate fraud that has cost the government billions of shillings in lost revenue.

Some of the new technologies that have been introduced include an Integrated Scanner Command Centre which enables KRA officers from Nairobi to easily verify the kind of goods being imported into and exported out of the country.

100 INVESTIGATORS

President Kenyatta recently launched the Regional Electric Cargo Tracking System which enables it to track on real time all trucks leaving the Port of Mombasa to destinations in either Uganda or Rwanda. This has reduced cases of goods destined for the regional markets being diverted to the local market.

The president also revisited the matter of lifestyle audits for KRA staff, saying it will help weed out rogue employees.

In a recent interview, KRA’s commissioner for intelligence and strategic operations, Mr Githii Mburu, said it will not be business as usual for individuals who appear rich but have little to show it in terms of taxes remitted.

This department with a team of about 100 investigators, is charged with probing people’s sources of income and their expenditure against the tax remitted.

It scrutinises various documents, including bank statements, import records, motor vehicle registration details, Kenya Power details and water bills among others.

“We’ll go overdrive. The indication we’ve got is that we need to do more because there are lots of these people,” said Mr Mburu.