Suspects accused of registering more than nine business names and fictitious invoicing amounting to more than Sh15 billion.
The Kenya Revenue Authority (KRA) said its officers conducted a search on the suspects' residential premises on Wednesday.
The suspects have been under surveillance for sometime, KRA said.
The taxman has charged two businesspeople with evading tax estimated at Sh7 billion in Kenya’s biggest such case ever.
The Kenya Revenue Authority (KRA) on Thursday accused Keval Kumar Navin Maisura and an alleged co-conspirator, who did not appear in court, of registering more than nine business names and using them to make fictitious invoicing in excess of Sh15, 369,511,856.
“They are suspected to have defrauded or aided in defrauding the government of approximately Sh2,459,121,896 in value added tax (VAT) and a further Sh4,610,853,556.80 in income taxes,” the KRA said.
The taxman had earlier Thursday said two suspects were in custody over the matter and it was not immediately clear why the other suspect, Arti Jagdiesh Bakrania (alias Arti Kevalkumar Maisura), was not in court.
Mr Maisura denied all the charges and was released on a Sh5 million cash bail or Sh15 million bond and ordered to deposit his passport in court. The pre-trial is set for April 19.
The KRA said it had carried out a sting operation in the residences of the two suspects on Wednesday and confiscated crucial documents and electronic devices, including 10 ETR machines.
Mr Maisura is accused of failing to declare Sh15.3 billion income earned between 2015 and 2016, which he ought to have declared in line with the Income Tax Act.
The businessman faces a separate charge of failing to pay a Sh4.6 billion income tax covering January 1, 2015 to December 31, 2017 contrary to The Tax Procedure Act of 2015. He faces a third charge of failing to remit value added tax amounting to Sh2.4 billion for the three years (2015 to 2017) and failing to remit value added tax returns.
The KRA said it is investigating 66 missing traders and more than 2,000 beneficiaries of the scheme.
The taxman will seek to recover lost taxes using the relevant provisions of the law. The case is part of an elaborate tax fraud scheme that the KRA has been investigating for more than one year.
The taxman found that traders have been using the scheme to claim fraudulent purchases in order to evade payment of billions of shillings in taxes.
The tax fraud syndicate had registered several business names for fictitious invoicing in a scheme that is similar to the “missing trader” phenomenon in India and Europe, says the KRA.
The scheme uses fictitious invoices to depict a business transaction where there is no actual supply or movement of goods and services.
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