Two IT firm chiefs in court for Sh1.4bn tax evasion charge

Two directors of an IT firm are expected in court today as part of the more than 800 company bosses that the Kenya Revenue Authority has accused of evading taxes.

Directors of Olympus Computer Garage George Bhutto Abiga and Berard Ochieng Okello face charges of evading taxes totalling Sh1.4 billion over a two-year period

KRA alleges that the duo failed to declare taxes due from sales they made to Mitsumi Computer Garage between September 2014 and August 2016. The Olympus Computer Garage allegedly filed nil returns for corporation tax and did not disclose its business transactions for the period.

Last week, the taxman said more than 800 directors whose firms have exhibited disproportionately high wealth growth that outmatch amount of taxes paid over a period of time would be arraigned in court starting this week.

Some companies increased import of raw materials without disclosing the value of their overall sales leading to reduced payment of taxes, the taxman charged.

Yesterday, KRA said its investigators traced Mr Abiga and Mr Okello through payments they had received after selling computers and other electronics to another business registered as a KRA withholding agent between 2014 and 2016.

KRA commissioner for investigation and enforcement, David Yego said the trend where high-value products like electronics are imported by air and undeclared has been on the rise with the suspects said to have been doing the same over an unspecified time.

“KRA has noted that high valued goods are being brought into the country through Jomo Kenyatta International Airport (JKIA) by importers who underdeclare their value hence paying less duty. The Authority is keenly monitoring all imports through the JKIA and those found culpable will be prosecuted,” Mr Yego said.

Olympus Computer Garage is suspected to have imported various computer gadgets and accessories such as laptops, flash drives which attract zero duty but are charged 16 percent Value Added Tax (VAT) as well as Railway Development Levy (RDL), which they also failed to declare

The company is also said to have failed to file VAT for the year 2014 and instead filed nil returns for the year 2015 and 2016 intentionally avoiding to declare sales of over Sh1 billion.

Their arrest comes in the wake of a heightened crackdown on tax evasion with KRA said to ramped up its efforts in the fight against tax evasion.

Recently additional 50 police officers from the Directorate of Criminal Investigations (DCI) were seconded to Times Tower.

Kenya’s tax revenues for the year to June rose 9.6 percent compared to the previous year to Sh1.49 trillion, but KRA still missed its collection target by Sh91.2 billion due to sluggish corporate earnings, reduced economic activity and freeze in hiring amid job cuts.

The collection gulf has left the KRA and the Treasury under huge pressure to widen the tax net and clamp down on cheats amid growing expenditure needs, especially from county governments.