The move comes as part of a nationwide effort to tighten tax compliance and protect businesses from legal risks.
Speaking at a leadership forum in Nairobi, KRA Commissioner General Humphrey Wattanga emphasized that missing-trader schemes involve the manipulation of invoices and records to evade taxes.
Speaking at a leadership forum in Nairobi, KRA Commissioner General Humphrey Wattanga emphasized that missing-trader schemes involve the manipulation of invoices and records to evade taxes.
“These schemes not only undermine fair taxation but also increase costs and create unfair competition for honest businesses,” Wattanga explained.
The warning follows a recent High Court ruling in Nairobi, which upheld a tax assessment of Ksh773 million against a construction company found to have participated in a missing-trader fraud.
The warning follows a recent High Court ruling in Nairobi, which upheld a tax assessment of Ksh773 million against a construction company found to have participated in a missing-trader fraud.
The company had failed to provide delivery notes, transport records, or proof of actual goods movement, demonstrating that invoices alone are not sufficient when serious doubts are raised by the KRA.
“This ruling reinforces the obligation for all businesses to maintain accurate and verifiable records of transactions,” Wattanga noted.
“This ruling reinforces the obligation for all businesses to maintain accurate and verifiable records of transactions,” Wattanga noted.
“Engaging with suppliers who cannot provide proper documentation exposes your business to audits, penalties, and potential legal action.”
KRA’s data-driven monitoring system has made it increasingly difficult for fraudulent schemes to go undetected.
KRA’s data-driven monitoring system has made it increasingly difficult for fraudulent schemes to go undetected.
By analyzing transactions, the authority can quickly identify suspicious patterns and intervene before significant losses occur. This proactive approach ensures that compliance remains transparent and verifiable.
Business owners are now urged to maintain a complete and verifiable paper trail for every transaction.
Business owners are now urged to maintain a complete and verifiable paper trail for every transaction.
This includes keeping proper records, documentation, and issuing electronic tax invoices in the prescribed format.
Input VAT claims and income tax deductions will only be allowed for transactions with verified and compliant suppliers.
Failure to follow these guidelines could result in audits, fines, or other legal consequences.
Failure to follow these guidelines could result in audits, fines, or other legal consequences.
“Due diligence is not optional,” Wattanga warned.
“Every business must confirm the legitimacy of its suppliers to avoid being implicated in fraud, even unknowingly.”
The KRA initiative also serves to protect the broader business ecosystem. By eliminating fraudulent players, the authority aims to create a level playing field where compliant companies can compete fairly.
The KRA initiative also serves to protect the broader business ecosystem. By eliminating fraudulent players, the authority aims to create a level playing field where compliant companies can compete fairly.
Moreover, the crackdown helps safeguard government revenue, which funds essential public services.
Businesses are encouraged to take advantage of KRA’s support systems, which include tools and resources designed to facilitate compliance.
Businesses are encouraged to take advantage of KRA’s support systems, which include tools and resources designed to facilitate compliance.