KRA used fake informer in Sh2bn Kingsway tax claim

Tyre dealer Kingsway has accused Kenya Revenue Authority (KRA) officials of making fake whistle-blower claims to extort money from the company through fabricated tax demands.

In a suit filed on Tuesday last week at the Nairobi High Court, Kingsway Tyres and Automart is demanding the return of documents taken by the taxman in a raid on its offices in 2002 after an alleged tip-off by an informer.

The raid led to KRA making a Sh2.4 billion tax demand that the tyre dealer has said was falsified in a cleverly schemed extortion scam by the tax collector’s officers.

“The assessment, claim and demand are shrouded with vendetta. The act of raiding and taking away Kingsway’s documents was not legitimate but a conspiracy by KRA officers to extract money from the company under the guise of commission for informers,” said Kingsway in the latest suit touching on the protracted row between the two parties.

KRA has not yet filed a response to the suit.

The tyre dealer wants the taxman to be compelled to furnish the court with vouchers, cheques and authority proving that it paid any fees to informers.

The firm also wants KRA to produce any statistics or records it may have confirming the number of tyres imported into Kenya for the period covering 1994 to 2005 indicating the names of the importers, number of tyres imported every year and amount of duty and VAT paid by each importer.

“Despite demands by Kingsway to return the said documents to enable it to respond to the assessment and the claim, KRA has refused to do so. Without the said documents being returned, the dispute at hand may not be resolved fairly,” said Nitin Shah, one of Kingsway’s directors.

Mr Shah has also defended his company by arguing that the amount claimed by KRA is “too colossal to be from a company trading only in tyres”.

According to Kingsway, the claim from KRA should possibly be made to all other tyre importers in the country and similar traders.

The suit comes barely a month after activist Okiya Omtatah filed a case in court accusing KRA of colluding to help the tyre dealer evade the Sh2.4 billion tax.

READ: Kingsway tax evasion case sucks in KRA boss

In that suit, Kingsway has denied the existence of any court order compelling KRA to collect tax from it. It has also dismissed claims that it changed its name to help it evade tax, arguing that the activist has not attached any documents to support the allegation.

Kingsway has asked the court to issue an order compelling the activist to pay Sh40 million as security for the costs it will incur in defending itself.

The tyre dealer has also denied Mr Omtatah’s claims that it bribed a number of former KRA officials, among them Kisumu Governor Jack Ranguma, to the tune of Sh900 million to help it evade the tax claim.

“Tax assessment and tax disputes are confidential matters between the commissioner and the taxpayer and it is not a matter of public interest hence the petitioners have no locus standi to institute the petition,” said Mr Shah.