The Kenya Revenue Authority (KRA) has urged businesses across the country to strengthen their due diligence processes and transact only with credible suppliers, following a recent High Court ruling that reinforced efforts to dismantle the growing missing‑trader scheme.
Speaking during a leadership forum, Commissioner General Humphrey Wattanga said the fraudulent scheme continues to undermine fair taxation by enabling fictitious invoicing, inflated costs and other illegal practices that distort the tax system.
Wattanga said KRA’s priority is to support compliance by ensuring businesses have access to accurate information and the tools needed to verify the legitimacy of their suppliers. He noted that many taxpayers unknowingly expose themselves to legal and financial risks by engaging with non‑existent or fraudulent entities.
“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.
His remarks came shortly after the High Court in Nairobi upheld a tax assessment of KSh 773,054,888 in the case of Commissioner of Domestic Taxes vs Dinesh Construction Limited, where KRA successfully demonstrated the existence of a missing‑trader fraud scheme.
The company failed to provide delivery notes, transport records or any evidence showing movement of goods, prompting the court to rule that the transactions in question were fictitious.
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In its judgment, the court reaffirmed that although 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 about the authenticity of the transaction. The ruling clarified that an invoice alone is insufficient and that taxpayers must provide competent, verifiable evidence of actual supply whenever requested by KRA.
The decision strengthens the statutory obligation for taxpayers to maintain proper records and supports KRA’s data‑driven approach to detecting and combating sophisticated tax fraud schemes.
Following this, KRA has since advised all taxpayers to keep a complete and verifiable paper trail for every transaction, including proper documentation and evidence in the prescribed format. The authority also reminded businesses of their legal duty to issue and transmit electronic tax invoices to ensure accurate determination of tax liability.
KRA further cautioned that input VAT claims and income tax deductions will only be allowed for transactions involving verified and compliant suppliers. Taxpayers were urged to conduct thorough due diligence before engaging in any business dealings, as failure to do so could expose them to penalties, disallowed claims and legal disputes.
The authority encouraged taxpayers to remain vigilant and fully comply with tax laws, noting that transparency and accountability are essential in safeguarding the integrity of the country’s tax system. For assistance, KRA advised taxpayers to reach out through its call centre, WhatsApp line, social media platforms, USSD *222#, official website or the nearest KRA office.
By Fredrick Odiero
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