Office of the Director of Public Prosecutions/FILEThe Director of Public Prosecutions (DPP) has approved charges against five individuals and 12 companies linked to an alleged scheme to defraud the government of Sh3.9 billion in Value Added Tax (VAT).
The decision follows joint investigations and a review of 70 inquiry files by the Office of the Director of Public Prosecutions (ODPP) in collaboration with the Kenya Revenue Authority (KRA).
According to the ODPP, investigations uncovered a network of companies, commonly referred to as “missing traders”, allegedly used to generate fictitious transactions and electronic tax invoices to facilitate fraudulent VAT claims.
The invoices were subsequently used by other businesses to unlawfully claim VAT refunds or reduce their tax liabilities despite no genuine purchases having been made.
“The suspects are also alleged to have been involved in the registration of 70 companies that were instrumental in executing the scheme,” the DPP said.
Following a review of the investigation files, the DPP approved prosecution in 36 cases involving transactions valued at approximately Sh3.2 billion.
The cases are estimated to have resulted in a VAT loss of about Sh518 million to the government.
Of the 36 cases approved for prosecution, six have been prioritised for immediate action. The six cases involve VAT implications of approximately Sh17 million.
The ODPP said the cases involve various companies, adding that the remaining files would be registered in court in due course, with the suspects implicated in them facing charges accordingly.
The investigations highlight the use of fictitious transactions and electronic tax invoices to facilitate alleged tax fraud, with the scheme targeting public revenue through unlawful VAT refund claims and the reduction of tax obligations.
The collaboration between the ODPP and KRA forms part of efforts to investigate and prosecute complex financial crimes involving tax evasion and fraudulent claims against the government.
The ODPP reaffirmed its commitment to combating economic and financial crimes, including sophisticated tax fraud schemes, and protecting public revenue.
The prosecution approvals pave the way for the suspects and companies to be brought before court to answer the allegations.
The allegations remain subject to determination by the courts.
