Nairobi, Kenya — The Kenya Revenue Authority (KRA) has urged businesses to strengthen due diligence processes and engage only credible suppliers following a High Court ruling that reinforces efforts to curb missing-trader tax fraud schemes.
Speaking at a leadership forum, KRA Commissioner General Humphrey Wattanga said missing-trader schemes continue to undermine Kenya’s tax system through fictitious invoicing, inflated expenses and fraudulent transactions.
“Our goal is to facilitate compliance by equipping businesses with the tools, information and access they need to comply confidently, while protecting them from the risks of engaging with non-existent or fraudulent entities,” Wattanga said.
The warning follows a recent High Court decision in Nairobi that upheld a tax assessment of Kshs 773,054,888 against Dinesh Construction Limited in the case of Commissioner of Domestic Taxes vs Dinesh Construction Limited. The court ruled in favour of KRA after it proved the existence of a missing-trader fraud scheme.
According to the ruling, the company failed to provide key supporting documents, including delivery notes, transport records and proof of movement of goods. The court reaffirmed that while a taxpayer may initially meet the burden of proof by presenting an invoice, this burden shifts back to the taxpayer once the Commissioner raises credible doubts. In such cases, invoices alone are not sufficient.
The ruling strengthens the statutory obligation for taxpayers to maintain proper records and reinforces KRA’s data-driven approach to detecting complex tax fraud schemes.
KRA has advised all taxpayers to keep a complete, verifiable paper trail for every transaction. This includes maintaining proper records in prescribed formats and issuing and transmitting electronic tax invoices to accurately determine tax liabilities.
Taxpayers have also been reminded of their legal duty to conduct due diligence on suppliers. KRA warned that input VAT claims and income tax deductions will only be allowed for transactions involving verified and compliant suppliers.
The Authority urged businesses and individuals to remain vigilant and comply fully with tax laws to avoid penalties and enforcement action.
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