KRA Launches Fresh Crackdown on Businesses Helping Companies Evade VAT Taxes

The Kenya Revenue Authority (KRA) has launched a fresh crackdown on businesses suspected of helping other companies evade taxes through fraudulent Value Added Tax (VAT) arrangements.

The authority is tightening checks on businesses seeking VAT registration following concerns that some companies are using the process to facilitate tax evasion rather than meet their own tax obligations.

Speaking during a stakeholder engagement in Machakos, KRA Commissioner for Micro and Small Taxpayers George Obell said the authority was reviewing its registration procedures to identify businesses involved in suspicious activities.

Obell explained that some businesses seek VAT registration specifically to help other companies reduce their tax liabilities through fraudulent transactions.

He said KRA was also responding to complaints from taxpayers over delays in VAT registration.

Businesses with established operations and easily verifiable information are expected to receive faster processing, while those whose activities cannot be confirmed will face additional scrutiny.

The commissioner said the measures were intended to close loopholes that allow businesses to misuse VAT registration procedures and facilitate illegal tax avoidance.

KRA Chairperson Ndiritu Muriithi also urged businesses to understand their tax responsibilities, noting that some cases of non-compliance arise because taxpayers are unaware of their legal obligations.

Muriithi emphasised the importance of taxpayer education in helping businesses understand and fulfil their responsibilities.

Under the Tax Procedures Act, businesses found guilty of tax evasion risk paying a penalty equivalent to twice the amount of tax they avoided.

The crackdown is part of KRA’s wider efforts to seal tax evasion loopholes, increase government revenue and improve compliance while making registration easier for genuine businesses.

https://www.kenyans.co.ke/news/129321-kra-begins-crackdown-businesses-suspected-vat-fraud