The Kenya Revenue Authority (KRA) has recovered Sh330 million from suppliers earning billions of shillings from counties without paying their share of duty amid a crackdown on tax cheats.
KRA said the taxes comprising of Value Added Tax (VAT), Income Tax and Withholding Tax, was recovered over a period of three years from various suppliers following investigations by the agency.
The enforcement team has stepped up analysis of companies’ financial dealings, especially firms doing business with the national government and counties, to unearth tax cheats by matching their payments and income declared to the authority.
“Following investigations, some suppliers agreed to pay taxes due while others have been charged in court. Others have opted to seek redress at the Tax Appeals Tribunal (TAT) and while some have since engaged the Authority with the aim of settling the cases amicably as per the provisions of the Tax & Customs Laws,” said KRA Commissioner for Investigations and Enforcement David Yego on Monday.
“We are confident that additional taxes shall be recovered from these suppliers.”
Mr Yego said tax evasion by county suppliers is mainly done through faking invoices to inflate cost in a bid to cut VAT obligations and failure by county governments to submit taxes withheld from the suppliers and employees.
Country suppliers have also been filing nil returns even after earning taxable income.
“Over the investigative period KRA carried out risk analysis and established that despite the increase in expenditure by the county governments on supplies of goods and services, there was no corresponding increase in tax payments by the suppliers in terms of income tax, Valued Added Tax and withholding taxes,” said Mr Yego.
The recovery of unpaid taxes comes at a time the taxman is racing to bring more people into the tax brackets and curb tax evasion in the quest to meet targets in an economy where Covid-19 pandemic has battered collections.
KRA’s enforcement unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA), which reveals individuals who own assets such as aircraft.
Treasury data show that tax collections in the year to June rose a measly 0.92 percent to Sh1.453 trillion compared with Sh1.440 trillion a year earlier.