Recently appointed KRA Commissioner General James Githii Mburu is hopeful about the ongoing crackdown on tax evaders.
Two of his most high profile cases have involved Keroche billionaires Tabitha and Joseph Karanja and Humphrey Kariuki of Wow Beverages, all of whom are out on bail.
They are accused of depriving the country of tax amounting to Ksh55 billion combined.
In an interview on Citizen TV on Tuesday, August 28, evening, Githii outlined 5 tactics that KRA is using to net tax evaders.
Use of highly sophisticated systems
"KRA like any other agency has evolved from being manual. About four years ago, people were paying manual returns. The officials were then tasked to review all files, gather information from financial firms to find out who is evading tax," he disclosed.
He made it clear that the KRA is better equipped now, thus making it easy to catch tax cheats.
Through the analysis of information, it is easier to nab suspects and prosecute them accordingly.
Looking out for fluctuations and inconsistencies in filed tax returns.
"If let's say you paid Ksh10 billion last year and this year you are meant to pay Ksh3 billion, we flag out that too," he spoke.
Sometimes the fluctuations in tax returns might have a margin that is so wide and unrealistic, that it raises eyebrows.
He divulged that KRA officials ran the system a day after the returns submission deadline, to filter out individuals and companies that had failed to file tax returns.
Sometimes, the authority receives tip-offs about its officials who abet tax evasion. Mburu noted that a lot of money was circulating in real estate and other investments (consumption taxes), but the records do not necessarily match their returns.
Through integration with other databases from sectors like lands and imports, it became easier to track people fuelling the tax inconsistencies.
The taxman revealed that he witnessed cases where people who had filed nil tax returns but imported cars worth millions.
Intelligence gathering.
This is done to complement the system's findings.
Once something that is out of the ordinary has been spotted in someone's returns, KRA deploys intelligence officers on the ground to ascertain the discrepancy.
The intelligence agencies employ a variety of means to get to the bottom of the issues raised by the system.
The investigation, he explained, goes through several stages, with the DCI in charge of it, after which they give their recommendations for KRA to take action.
Lifestyle audits.
This is done once someone has been flagged by the system.
If one's lifestyle does not match their tax returns, then there is cause for concern. Also, if one does not file taxes, then KRA tries to find out why they didn't.
After investigations have been conducted and findings made, the persons of interest are invited to give their side of the story.
Some of the suspects fail to comply with KRA due to sheer ignorance and the authority has the mandate to educate them about their tax responsibilities.
Lifestyle audits take time and the investigative agencies are short of resources and manpower, but with time, KRA will get there.
Mburu also clarified that all individuals who have been arrested were not just nabbed on a whim, but that every effort to engage them had failed.
He alleged that they were arrested and charged because they seemed determined to evade the law.
The taxman concluded by cautioning Kenyans to reject the narrative that KRA is fighting individuals.
Over the past two weeks, over 90 KRA officials have been grilled by the Anti-Fraud Unit over allegations of abetting tax evasion
