Facebook caught up in payroll tax evasion claim in Kenya

The fight between social media giant Facebook and its employees in Nairobi has taken a new turn after its workers moderating content on Meta’s platforms, including WhatsApp, accused the firm’s local agent of falsifying payslips and failing to remit deducted tax for at least four years.

Newszetu has learnt that the moderators have also filed an official complaint with the Kenya Revenue Authority (KRA), asking the taxman to investigate the tax evasion claim, in their latest grievances against the social media company.

The workers have written to the KRA to carry out an “urgent” investigation on non-remittance of pay-as-you-earn (PAYE) taxes and altered summary of the annual tax deduction form by their employer, Samasource Kenya EPZ Limited (Sama).

To back their claim, the moderators have presented to the KRA payslips and P-9 forms that suggest that the PAYE deducted from their salaries differs from the figures reflected on the tax forms they say Sama emailed them recently to file tax returns for income earned last year.

Copies of the payslips and P9 forms seen by Newszetu show that the effective date for KRA PINs of some of the workers was December 2021, but Sama has been deducting them monthly PAYE of between Sh10,375 and Sh51,157 from as back as 2020.

A letter seen by Newszetu shows that 28 workers, through Nzili & Sumbi Advocates, lodged the complaint against Meta and Sama jointly.

“We officially lodge a complaint regarding the non-remittance of PAYE taxes deducted from our clients’ salaries and unlawful alteration of P9 forms. We request your immediate attention and swift action in addressing these issues, which affect not only our clients’ rights as taxpayers but also the integrity of the Kenyan tax system,” says the letter dated June 14. It was addressed to the KRA acting commissioner general Rispah Simiyu.

The allegations, if found true, could set up Sama for financial penalties. The KRA penalty on businesses for late filing of PAYE is set at 25 percent of the tax due or Sh10,000, whichever is higher. Other PIN-related offences attract Sh2,000 penalty per offence.

However, Sama’s vice president for global service delivery Annepeace Alwala told the Business Daily in an emailed response that the company was not aware that its employees have written to the taxman asking for the scrutiny.

“We are not aware. We have been remitting all the staff deductions to KRA promptly. Our submissions are two-pronged. Every month, we submit deductions for staff with and without KRA PINs,” said Ms Alwala.

“Samasource is fully compliant and has consistently passed all annual KRA audits.”

Samasource Kenya has been carrying out content moderation for Meta in Kenya since 2019. In January 2023, it announced it would be discontinuing its work for the social media giant at the end of March.

However, Ms Alwala said Sama makes monthly submissions of PAYE deductions for staff with KRA PINs and a lump sum under PAYE tax deducted from employees without PIN “as guided by the KRA.”

The content moderators’ pay is made up of basic pay, project premium allowance, overtime allowance, out of country allowance, overtime and bonus, making the gross pay and PAYE vary from one month to another.

The letter to the KRA says “a good number” of the workers are foreign nationals who were brought to Kenya and have never been issued with KRA PINs—a mandatory requirement for any person who expects to earn any income in Kenya.

“Those of our clients who do not have KRA PINs are paid via M-Pesa on the employer’s insistence. Despite not having KRA PINs, a deduction known as PAYE has always been made from our clients’ pay slips,” says the letter.

“The understanding was that this amount would be remitted to KRA as back taxes once a PIN was assigned to our clients.”

However, the workers claim that they have made a “shocking discovery” that the KRA’s i-Tax portal shows no remittances were made for the period they did not have PIN certificates. This is despite the consistent deductions of PAYE from their salaries.

The workers, through their lawyers, say that Samasource Kenya, on various dates in May and June this year, sent emails to the workers informing them that the earlier issued P-9 forms had been amended.

“We noted a slight system error in the P9 previously shared with you. Please find attached the corrected P-9 tax deduction card for year 2022,” says a copy of the email sent to the workers on May 18 and seen by Newszetu.

However, Sama denied having altered P-9 forms as alleged by the workers who say the revised P-9 forms “grossly exaggerate” their basic salary.

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