The Kenya Revenue Authority (KRA) detectives have identified 1,309 firms and wealthy individuals that owe it Sh259 billion, setting the stage for travel bans, asset freeze and deactivation of Personal Identification Numbers (PINs).
KRA Commissioner General Githii Mburu did not disclose the names but warned the agency is probing the tax evaders further to determine the punishment to be meted.
The tax cheats risk travel bans, collection of duty directly from their suppliers and bankers and prosecution in what promises to be the biggest crackdown yet on high net-worth persons.
The KRA is racing to bring more people into the tax brackets and curb tax cheating and evasion in the quest to meet targets in an economy where Covid-19 pandemic has battered collections.
“We have profiled 1,309 individuals and companies with tax-loss estimated at approximately Sh259 billion.
These entities are earmarked for further investigations and legal action for non-compliance,” Mr Githii said in a notice.
The taxman reckons the tax evasion schemes include filing of fictitious value-added tax (VAT) invoices to evade paying taxes running into billions of shillings.
Additionally, the KRA said that other firms have been faking invoices to inflate purchases of inputs in a bid to cut their VAT obligations.
The KRA flagged firms in the construction, importation of hardware and household goods, scrap metal dealers and importers of electronic items including mobile phones for under-declaring VAT dues.
Others, especially wealthy individuals, have been hiding their sources of income while engaging in luxury spending and accumulation of property including purchase of homes and high-end cars.
The KRA enforcement unit has been using various databases to pursue suspected tax cheats, among them 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 helicopters.
Car registration details are also being used to smoke out individuals who are driving high-end vehicles but have little to show in terms of taxes remitted.
Huge tax demands
Kenya Power meter registrations are helping the taxman to identify landlords, some of whom have been slapped with huge tax demands.
The KRA has hired a team of auctioneers to help it track the properties of the individuals and companies who have failed to pay the taxes due.
Vehicles, land, homes, office blocks and workplace equipment will be on the KRA radar at a time the taxman has stepped up the war against tax cheats.
CEOs and other top managers of tax-evading companies could be barred from flying out of the country if the restrictions on flights imposed to limit spread of Covid-19 are lifted. Individuals and companies targeted are those that have lost disputes against the KRA in court or at the tax tribunal.
Should the KRA make good its threat to deregister the PINs, this will mean that the affected individuals and businesses will be cut off from making transactions that require proof of active registration as a taxpayer.
The list of transactions that requires proof of an active PIN certificate includes registration of land titles, approval of development plans, registration, transfer and licensing of motor vehicles and registration of business names and companies.
Others are underwriting of insurance policies, customs clearing and forwarding, payment of deposits for power connections, supplying goods and services to the State, as well as opening accounts with financial institutions.
Employers would also be committing a crime if they wire salaries to the accounts of workers whose PINs have been deactivated.
The KRA stepped up its fight against tax evasion and sought additional funding to hire 1,000 intelligence and enforcement officers in an effort to beef up the investigations on wealthy individuals and firms.
President Uhuru Kenyatta in November last year directed the revenue agency to hunt down wealthy individuals and firms that have for years evaded paying taxes and denied the country money to fund development projects.
Reduced business activity, layoffs and pay cuts that followed the imposition of restrictions to curb the spread of Covid-19 also reduced opportunities for the KRA to raise tax collections.
Government spending on development projects like roads, power plants and water infrastructure was hit by the lower revenue collection, further hurting the economy.
State spending puts money in the pockets of workers as well as private firms linked to infrastructure works.
This, in turn, affects suppliers and subcontractors down the value chain.