- Taxpayers under the KRA’s radar for failing to pay taxes owed have nearly doubled the average of 529 tax evasion schemes identified annually by the agency’s intelligence unit between 2012 and June 2020.
The Kenya Revenue Authority (KRA) has singled out 1,058 businesses and individuals on suspicion of tax evasion amounting to Sh132 billion in the 11 months to May 2021, more than four times the annual average for a decade.
Taxpayers under the KRA’s radar for failing to pay taxes owed have nearly doubled the average of 529 tax evasion schemes identified annually by the agency’s intelligence unit between 2012 and June 2020.
The potential tax return, on the other hand, is 441.54 percent more than the annual average of Sh24.38 billion in the eight-year period after the formation of the KRA intelligence unit in 2012.
The offenses range from companies that underreport sales or inflate allocations to cut profits, which are taxed, to factories that overstate purchases to claim more value-added tax refunds, said Terra Saidimu, Commissioner of Intelligence and Strategic Operations Unit. by KRA Business Daily In an interview.
Other schemes include employers underestimating salaried workers and remitting part of the pay as subsidies to reduce taxes due to smuggling from importers.
The tax collector, who has struggled to meet revenue targets set by the Treasury over the years, attributes the rise in suspicious tax evasion schemes to better information sharing between his detectives and the attached to other intelligence and enforcement agencies.
The multi-institutional working group, which has a framework for sharing information, includes the National Intelligence Service (NIS), the Criminal Investigations Directorate, the Financial Reporting Center, the Ethics and Anti-Corruption Commission and the Office of the Director of the Public Ministry .
“Those are partners who give us information every time they investigate a case where finance is involved,” said Dr. Saidimu.
“Some people have made their business model where tax evasion is part of their profitability. Those are the people we call hardcore tax evaders.
“Once we have established that there is deliberate tax evasion, we pass it on to our investigators, who investigate and, in some cases, recover taxes or prosecute. But the prosecution does not deny the payment of taxes. “
Some 682 individuals and companies were identified between July 2020 and May 2021 for possible tax evasion due to errors that denied the tax collector Sh63 billion. This is almost five times the average of Sh10.63 billion marked from 2012 to June 2020 in 3,151 cases. The remaining 376 cases with an estimated tax evasion of 69 billion shillings concern “hardcore” tax evaders who “deliberately” circumvented tax obligations.