A new petition from a concerned Kenyan has called on Kenya’s Immigration Department and Kenya Revenue Authority (KRA) to investigate potential tax evasion and work permit irregularities at KCIC Consulting, a prominent consultancy firm.
At the center of the allegations is KCIC’s CEO, Prabhakar Vanam, whose work permit status has raised concerns amid claims that he has been working without a valid permit, a breach of Kenyan immigration laws.
According to the Kenya Citizenship and Immigration Act, Section 34, “no person who is not a citizen of Kenya shall enter or remain in Kenya unless they have a visa or work permit.”
This law underscores the importance of securing appropriate documentation before foreign nationals engage in employment within the country.
The Kenyan Immigration Act also mandates that employers obtain a work permit or special pass before hiring foreign nationals.
Violations of this requirement can result in severe penalties, including fines up to Ksh 500,000, imprisonment of up to three years, or both.
In this case, the lack of a valid work permit for Mr. Vanam, if proven, constitutes a clear violation, and as the CEO of KCIC Consulting, Vanam’s undocumented status could lead to serious repercussions for both himself and the firm.
KCIC Consulting may also face legal liabilities if found to have facilitated the employment of any individual without a valid work permit.
The allegations against KCIC Consulting go further than immigration violations.
KRA detectives have been urged to investigate the firm for possible tax evasion, as unremitted tax revenue has placed substantial financial strain on President William Ruto’s administration.
Investigations suggest that KCIC’s top management may have been evading its tax obligations by failing to deduct and remit funds to KRA, specifically PAYE (Pay As You Earn) remittances, for certain employees classified as “consultants.”
It has been alleged that KCIC Consulting, in collaboration with certain high-earning employees, devised a strategy to avoid deducting the full PAYE.
Instead, the company is purportedly only remitting 5% withholding tax on certain employees’ salaries, where it should remit 25% as PAYE.
This alleged arrangement not only circumvents tax obligations but also provides these individuals with an unauthorized tax advantage.
One aspect of the investigation centers on consultants who earn salaries averaging Ksh 500,000.
For these employees, KCIC Consulting allegedly remits only Ksh 25,000 in withholding tax each month to KRA.
However, the actual amount due as PAYE should be around 25% of their net salary, creating a substantial tax gap that has raised suspicions of financial impropriety.
KCIC Consulting, through its spokesperson, insists that these individuals are indeed consultants rather than full-time employees.
However, financial experts argue that if these consultants are working under KCIC’s direct supervision and receiving regular salaries, they should legally be classified as employees, subject to full PAYE deductions.
The definition of a consultant generally requires that services be provided by an external registered consultancy firm, not individuals, in which case the firm would manage PAYE remittances.
To address these alleged violations, KRA has been urged to not only scrutinize KCIC Consulting’s employment and tax remittance practices but to broaden the investigation to other businesses and partners associated with KCIC Consulting.
This would help uncover any instances of tax evasion, deliberate non-compliance, or potentially fraudulent activities by associated corporations.
The potential implications for KCIC Consulting are significant.
If found guilty, the firm could face substantial penalties, while Mr. Vanam, its CEO, risks deportation or legal action if the work permit allegations are substantiated.
As this investigation progresses, it highlights the growing concerns within Kenya’s business sector over compliance with immigration and tax laws, both essential for maintaining accountability and financial stability.
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