alexa Rich men hunted by KRA in tax evasion probe - Daily Nation

Rich men hunted by KRA in tax evasion probe

Saturday October 6 2018

tax

Former Nairobi Governor Evans Kidero is arraigned in Nairobi on October 2, 2018 on abuse of office claims. He has accused the Ethics and Anti-Corruption Commission of harassment. PHOTO | FILE | NATION MEDIA GROUP 

BRIAN WASUNA
By BRIAN WASUNA
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Kenya's leading businesses and their directors have started feeling the pinch after the Kenya Revenue Authority (KRA) cast its net far and wide in a renewed drive to catch tax evaders.

KRA has been stung by a perennial shortfall in collections, coming against the backdrop of pressure for the government to pay its rising debts, especially to external creditors, as well as to pay for major projects and other obligations, such as salaries.

Now, politicians, bureaucrats, corporate titans and some of the wealthiest businessmen in the country — as well as the companies in which they are directors — are on the taxman’s radar.

Although some have protested their innocence, saying they have been paying their taxes, they will have to contend with the public backlash that comes with the revelations considering that ordinary workers are taxed regularly and painfully.

SUSPECTS

Whereas some are being asked to pay as much as tens of billions, others are being sought for tens of millions.

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Among those named in court papers filed by the taxman as well as reports by the Auditor-General are former Nairobi Governor Evans Kidero, his former finance chief Jimmy Mutuku Kiamba, former Foton agent Da Li, Mastermind Tobacco owner Wilfred Murungi and Oil Libya Kenya General Manager Duncan Murashiki.

Although they do not owe the money in their personal capacity, they were at the helm of companies and public institutions that have been accused of failing to pay full taxes.

Others which are on the spot are Mumias Sugar Company, which is listed on the Nairobi Securities Exchange, Sony Holdings which owns the Westgate Mall and Darasa Investments, which was controversially linked to the importation of sugar earlier in the year.

The estates of fallen billionaires Njenga Karume and Gerishon Kirima — which have since attracted parallel disputes between administrators and the respective families — are also on the radar.

AUCTION

Indeed, KRA has already asked auctioneers to attach the properties of Mastermind Tobacco over its failure to pay about Sh2 billion in taxes.

The taxman sent a notice to the company owned by Mr Wilfred Murungi on September 19.

In all, the companies, individuals and estates have been asked to pay sums running into tens of billions of shillings cumulatively.

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. It 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.

Efforts to get a response from KRA on its renewed drive and why it is still not meeting collection targets were futile as the taxman had not responded to our queries by the time of going to press.

BANKS

But the lengths and depths that KRA is going to cover to net big names and companies that it believes owe it money are unprecedented.

Through the use of technology and corroboration with other law enforcement agencies, the taxman believes that soon evaders will have nowhere to hide.

Already, banks have been put on notice to match account numbers to KRA PINs as part of a wider strategy to track incomes for purposes for tax deductions.

The KRA acting commissioner for domestic taxes, Ms Ruth Wachira, said that leakages had been plugged through use of information technology and business intelligence systems which net "big and small fish" alike.

“We have really not gone out to target specific taxpayers," she said. "We have maintained surveillance and focus on all taxpayers. For every big tax payer on the spotlight, we have perhaps tens more small taxpayers who are also on our radar.”

For instance, in Kiamba’s case, KRA rode on the findings of the Ethics and Anti-Corruption Commission.

RECOVER

While investigating Mr Kiamba, who has since been jailed for abuse of office, EACC came across two bank accounts at Stanbic Bank.

From them it determined that he owed the taxman Sh480 million.

It also uncovered another nine bank accounts Mr Kiamba had been operating, and obtained freeze orders.

The EACC has since moved to the Anti-Corruption Court to have the former Nairobi CFO convicted for embezzlement and to recover assets he acquired while in public office.

In some instances, the taxman has been able to settle disputes out of court, as was the case last month when it reached a deal with sugar importer Darasa Investments.

RESOLUTION

Under the deal, the firm owned by Mr Ibrahim Hillowoly agreed to pay the Sh2.5 billion to have its consignment of 40,000 tonnes of sugar released.

The Darasa deal pushed to Sh10.8 billion the amount KRA has raised through out-of-court settlements this year.

KRA had earlier reached amicable settlements with 181 companies which then paid Sh8.3 billion.

It has not been a smooth ride though. In May, it lost in court a demand of Sh822 million it had placed on lawyer Tom Ojienda.