Whistleblowers report Sh2 billion tax evasion

Whistleblowers have reported suspected tax evasion cases amounting to Sh2.1 billion in six months through May using an online reporting platform, setting them up for cash reward from the taxman.

The Kenya Revenue Authority (KRA) says it has identified 359 companies and individuals for possible tax evasion from voluntary reports submitted by whistleblowers who conceal their identity.

Maximum reward for persons who provide information that leads to recovery of taxes stands at Sh2 million or five percent of the taxes, whichever is lower, a value which will more than double to Sh5 million if lawmakers back changes to the KRA Act.

Those whose information leads to identification of un-assessed taxes are presently paid as much as Sh100,000 but this will jump to Sh500,000 if the legal amendments by the Treasury become law.

Commissioner for Intelligence and Strategic Operations Terra Saidimu says detectives at Times Tower have started verifying transactions made over the years by the suspected tax cheats outed remotely by the whistle blowers.

The taxman is seeking bank statements and other transactions from third parties such as telcos and utilities like Kenya Power on the flagged firms and traders, Dr Saidimu said.

The KRA last November launched the web-based anonymous reporting system, dubbed iWhistle, providing a whistle-blower framework for reporting tax evasions such as bribery, fraud, conflict of interest, abuse of office, concealment and diversion of cargo.

“Once we receive the information we take it through our process of validation. By end of May we had ( identified) 359 whistles with about Sh2.1 billion in our own assessment,” said KRA’s chief spy.

“We get further information through the banks and also other third parties. We then consolidate them, write a profile and then forward for investigations or for compliance.”

A case under compliance means the taxpayer evaded taxes by error and she is usually asked to provide documentary evidence and facilitated to register, file and pay the due taxes.

This is unlike an investigation case where the taxpayer is believed to have deliberately avoided tax obligations and usually results in prosecution.

I-WHISTLE TOOL

Before the iWhistle went live, the taxman had been relying on walk-ins, e-mails and telephone calls made through the Complaints and Information Centre for tips — a technique which has had limited success partly because it requires informants to submit their personal details.

Under the iWhistle platform, a whistleblower is assigned a special code to identify her once she reports a tax crime on the website, concealing her real identity.

Treasury secretary Ukur Yatani has explained enhanced rewards have been necessitated by “the complexities and changing dynamics on intelligence gathering” and will “bolster tax compliance and revenue collection”.

KRA staff and public service officers tasked with enforcing tax compliance are excluded from the reward that comes from volunteering information which leads to identification of un-assessed taxes or recovery of the taxes.