The Kenya Revenue Authority (KRA) has secured a landmark victory in a Sh1 billion Value Added Tax (VAT) fraud case against China Communications Construction Company Limited (CCCC).
The case, which centred on an elaborate missing trader fraud scheme—a tactic used by organised crime groups to steal VAT from governments—involved the Chinese firm evading taxes through the use of shell companies.
Investigations by the taxman revealed that the Chinese firm was filing fictitious invoices, and laying claims for an inflated input VAT through shell companies.
“The upshot of the foregoing analysis is that the appeal lacks merit, and the tribunal accordingly proceeds to make orders that the appeal be and is hereby dismissed,” the Tribunal ruled on August 9, 2024.
The case dates back to November 3, 2023, when the KRA issued VAT assessment orders along with debit adjustments to the Chinese contractor, disallowing input VAT claims totalling nearly Sh1 billion.
The company objected to the VAT assessments at the Tax Appeals Tribunal, arguing that such an audit was both factually and legally defective.
- KRA pressuring landlords to hike rent
- How to secure your affordable housing unit
- How Eldoret trader pulled off Sh2.4bn pyramid scheme
However, the investigations by the taxman found that CCCC had been engaging in fraud to reduce its tax liabilities.
Evidence presented before the tribunal revealed that the company had claimed input VAT from six fraudulently registered companies. The money was eventually transferred to accounts in China, further complicating the investigation.
Investigations into tax fraud revealed how the Chinese firm evaded payment of over Sh1 billion in tax, with incomes transferred through shell companies to accounts in China.
“Tax fraud investigations unearthed how the Chinese firm evaded the payment of over Sh1 billion tax, and incomes were transferred through shell companies to accounts in China,” the taxman said.
Email your news TIPS to Editor@nairobilawmonthly.com, and to advertise with us, call +254715061658 anytime of the day
