How Firms Cheated KRA to Avoid Paying Billions - CG Mburu

  • KRA Boss James Githii Mburu gives an address during a past event
    KRA Boss James Githii Mburu speaks at a conference in 2019
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  • The Kenya Revenue Authority (KRA) lost revenue worth billions after 77 firms that supplied Covid-19 related items failed to declare their income and also declined to remit taxes. 

    Only 43 involved in the supply of Covid-19 materials to Kenya Medical Supplies Agency (KEMSA) paid tax totalling Ksh 324 million after supplying goods worth Ksh 2 billion. KRA, however, declined to disclose the amount of revenue lost. 

    Appearing before the members of the Public Investment Committee (PIC) in Parliament on Wednesday, February 17, KRA's Commissioner General, James Mburu, disclosed that 23 companies listed supplies to Kemsa under exempt supplies, meaning that they would not be subjected to tax.

    Some firms did not have KRA PINs thus could not be traced and others were international firms which were yet to register for PINs in Kenya. 

    The Kenya Medical Supplies Agencies headquarters in Industrial Area Nairobi.
    The Kenya Medical Supplies Agencies headquarters in Industrial Area Nairobi.
    File

    "We are currently conducting reviews on the companies to establish their compliance status. In light of the information obtained from the report and the amounts involved, KRA will also undertake an in-depth audit of the firms," Mburu said.

    The Commissioner-General singled some firms including one that got a tender worth Ksh 160 million but remitted Ksh2,600 in taxes. 

    He added that they will ensure integrity and fairness during the probe and also expose firms which purchased items locally but listed the supplies under imported goods. KRA wants the accused firms to pay instalment taxes, penalties and interests accrued. 

    KEMSA contracted 102 local companies to supply Covid-19 related items valued at Ksh 7.8 billion. The agency, nonetheless, has managed to pay only Ksh 4 billion to the firms which supplied it with masks and personal protective equipment (PPEs). 

    A report by the Auditor-General, Nancy Gathangu revealed that KEMSA flouted tender laws while contracting companies. Gathangu said that over Ksh 2.3 billion was lost through the procurement scandal. 

    President Uhuru Kenyatta ordered an investigation into the case and directed the Director of Public Prosecutions (DPP) Noordin Haji to submit a report once the inquiry is completed. Haji returned a file presented to him from the Ethics and Anti-Corruption (EACC) detectives saying that he wanted further investigations conducted. 

    “The team identified key areas that need to be sufficiently covered by way of further investigations before a final decision can be made. 

    "Having carefully analysed the report by the team and considering the requirements for a strong and successful prosecution, I have come to the conclusion that the identified areas should be covered by the EACC," Haji said. 

    Director of Public Prosecutions (DPP) Noordin Haji addresses a press conference at his office in Upperhill, Nairobi on Thursday, March 5, 2020.
    Director of Public Prosecutions (DPP) Noordin Haji addresses a press conference at his office in Upperhill, Nairobi on Thursday, March 5, 2020.
    Simon Kiragu
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    Kenyans.co.ke