KRA on alert over VAT fraud

Value added Tax (VAT) fraud has become common practice in the country with the effects going beyond loss of tax revenues, creating uneven playing field for businesses and often associated with organized crime.

According to Kenya Revenue Authority (KRA) commissioner John Mburu, many traders have been manipulating exports leading to losses due to illicit financial flows.

Mr Mburu said the government is losing billions of shillings to tax evasion through exports to neighboring countries that actually end up in the local market.

According to KRA, traders are taking advantage of the information vacuum between regional tax authorities.

“One of the things we should learn is when we do not cooperate in exchanging information and invest in activities of dealing with this problem we will end up encouraging these fraudsters,” said Mr Mburu.

KRA is hosting the second training for African Academy on Tax and Financial Crimes Investigation in partnership with the Organization for Economic Cooperation and Development (OECD)this week to sharpen the skills of customs agents across the region.

The training is expected to increase awareness of the risks to countries posed by corruption and money laundering and the ability to better combat the offenses.

Mr Mburu said the program will leverage participation to connect various agencies involved in the fight against tax crimes and financial crimes in Africa.

“VAT fraud manifests itself in many forms. There is what we call manipulation of claims to create refunds as manifested by what we call the missing trader, which is a very serious phenomenon in many countries,” he said.