The Kenya Revenue Authority (KRA) has issued a stern warning to Kenyan business owners about the risks of engaging with non-credible suppliers, cautioning that such actions could lead to legal consequences.
The notice issued on Tuesday follows a recent High Court ruling that reinforced national efforts to clamp down on missing‑trader fraud schemes.
Speaking at a leadership forum in Nairobi, KRA Commissioner General Humphrey Wattanga emphasised that missing‑trader schemes undermine fair taxation by facilitating fictitious invoicing.
Additionally, Watanga said that missing trader schemes also contribute to inflated costs and other fraudulent practices.
“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,” he said.
The High Court in Nairobi recently upheld a tax assessment of Ksh773 million against a construction company after KRA demonstrated that the company had participated in a missing‑trader scheme.
Additionally, the company failed to provide delivery notes, transport records, or evidence of actual goods movement, prompting the court to reaffirm that invoices alone are insufficient proof once the Commissioner raises credible doubts.
This ruling strengthens the legal obligation of taxpayers to maintain accurate and verifiable records, according to the taxman.
According to KRA, its data-driven approach now makes it easier to detect and combat complex tax fraud schemes, ensuring that the burden of proof rests with businesses that claim compliance.
Meanwhile, businesses have been urged to maintain a complete and verifiable paper trail for every transaction.
This, according to the law, includes proper records, documentation, and issuing electronic tax invoices in the prescribed format to accurately determine tax liability. Taxpayers are reminded that due diligence on suppliers is not optional.
This now means that input Value Added Tax (VAT) claims and income tax deductions will only be allowed for transactions involving verified and compliant suppliers. Failing to do so could result in audits, penalties, or even legal action as per the law.
