Court Charges Companies with Tax Evasion, Issues Arrest Warrants for Culprits

By Catherine Muema On Jun 20, 2024

Tax — KRA offices at the Times Tower, Nairobi

By Shadrack Nyakoe

The Nairobi Anti-Corruption and Economic Crimes Court Chief Magistrate Thomas Nzyoki on Wednesday issued warrants of arrest against three company directors involved in the VAT ‘missing trader’ tax fraud scheme.

Benson Otieno Kisero and Eunice Opili Likuyani, being directors of Wise Pick Trading Limited and Jemimah Nasiche Mukungu a director of Priteria Limited were separately charged for the offences of fraud in relation to tax contrary to Section 97(c) as read with Section 104(3) of the Tax Procedures Act, 2015.

Through extensive investigations, the Commissioner Investigations & Enforcement established that the companies were engaged in a tax fraud scheme commonly known as ‘Missing Trader’, which involves the use of fictitious invoices to depict a genuine business transaction where none exists.

Only genuine invoices are allowable for purposes of claiming input costs under Section 17 of the VAT Act since a trader cannot purport to sell that which they have not acquired.

Purchase declarations as filed by the two companies were established to be false as the purported suppliers distanced themselves from the said transactions.

The Commissioner found that Wise Pick Trading Limited and Priteria Limited engaged in the fraudulent scheme in order to reduce their tax liability by Kshs. 104,083,479 and KShs. 24,694,188 respectively.

In the same court, a warrant of arrest was issued against Thomas Githangi Kanyi who was charged for engaging in a tax evasion scheme involving under- declaration of income.

Investigations established that between 2016 and 2019 the taxpayer concealed income amounting to Kshs.75,584,812 hence reducing his tax liability by Kshs. 20,652,670.

Additionally, the said trader was found to have failed to register for VAT despite having attained the KShs. 5,000,000 threshold for VAT registration occasioning a VAT loss of KShs. 11,257,559.

Meanwhile, Michael Wafula Obunde, Jesse Michael Muganda and Clifford Otieno of Geo Freight Forwarders Ltd denied charges of making false customs entries using a KRA PIN registered to Di Lorenzo Limited and were granted bond of KShs 200,000.

Also appearing before the same court were Joseph Ndungu Guchecha, Ramadhan Kariuki Gitau, Edwin Wanjala Barasa, Francis Kyalo Mwandandu who denied charges of stealing 38 tonnes of condemned milk powder.

Others who failed to appear in court for tax evasion charges include Annastasia Wangui Ng’ang’a who was charged for evading KShs. 11,541,615 in both income and VAT between 2016 and 2019, Douglas Kathurima Mwiti, Saeed Sheikh Abdirahman, Sidoman Investments Limited, Christopher Odongo Asoka and his company Emergency Relief Supplies Limited, Florence Wanjiku Muiruri, Moses Boyi Odhiambo and Daniel Ngugi.

“KRA is committed to ensuring that each person pays their fair share of taxes in order to enable a fair business environment and avoid undue fraudulent competition. We continue staying alert to ensure that any form of tax evasion is detected, disrupted and curbed with the perpetrators facing the criminal justice process for their crimes,” stated the commission in a press statement.