The Kenya Revenue Authority (KRA) has initiated an investigation into political activist and businessman Morara Kebaso.
The authority alleges that over the past three years, Kebaso’s businesses have generated approximately Ksh 186 million in revenue, yet he has either declared no income or failed to file tax returns altogether.
KRA’s scrutiny focuses on five companies associated with Kebaso: Igrow Digital Enterprise, Morara Home Furniture, Luku Fashion, Morara Properties Limited (also known as Blacksmith Morara Limited), and Backtent Security Limited.
The tax authority contends that these entities have not fulfilled their tax obligations, despite owning properties and engaging in various business activities.
A key aspect of the investigation involves three bank accounts linked to Morara Properties Limited, Morara Home Furniture, and Kebaso personally.
KRA’s preliminary findings suggest that these accounts have been active, receiving substantial deposits primarily through M-Pesa paybill services.
This activity contradicts the businesses’ declarations of nil income or their failure to file returns.
An analysis of these accounts revealed trade credits totaling Ksh 186.3 million over three years: Ksh 9.5 million in 2022, Ksh 31.9 million in 2023, and Ksh 144.9 million in 2024.
Notably, Morara Home Furniture accounted for nearly 80% of these deposits, amounting to Ksh 146.9 million.
KRA also points out that Kebaso’s businesses are not registered for Value Added Tax (VAT), despite exceeding the mandatory registration threshold of Ksh 5 million in annual turnover.
Consequently, the authority plans to forcibly register these businesses for VAT under Section 34 of the VAT Act.
KRA has calculated VAT dues of Ksh 25.7 million and an estimated income tax of Ksh 1.4 million for 2022 and 2023, based on a 12% profit margin typical of furniture businesses.
The income tax for 2024 is yet to be determined. In total, Kebaso is accused of owing Ksh 27 million in unpaid taxes, comprising Ksh 25.7 million in VAT and Ksh 1.37 million in income tax.
Additionally, records from the National Transport and Safety Authority (NTSA) indicate that Kebaso owns six vehicles, including a Renault Van, Land Cruiser Pick Up, Land Cruiser Prado, Volkswagen Passat, Captain Tuk Tuk, and a TVS Motorcycle.
KRA argues that the ownership of these assets is inconsistent with declarations of nil income or non-filing of returns.
Kebaso has been summoned to appear at KRA’s Nairobi offices on January 13, 2025, for an interview.
He is required to provide various documents, including general ledgers, asset registers, invoices, sales and purchase ledgers, payroll records, and bank statements for the entities and their directors.
In response to these allegations, Kebaso has dismissed them as a political witch-hunt.
He asserts that he is a law-abiding citizen and a tax-compliant businessman, emphasizing that he has followed the law meticulously.
Kebaso has also shared certificates of tax compliance issued to him by KRA for the years 2022 and 2023, challenging the basis of the authority’s claims.
This investigation adds to Kebaso’s recent legal challenges.
In October 2024, he was charged with cyber harassment under Section 27 of the Computer Misuse and Cybercrimes Act.
The charges were related to allegations of spreading false information about a businessman on his social media accounts.
Kebaso was released on a cash bail of Ksh 500,000, with the case set for mention later that month.
The situation has garnered public interest, given Kebaso’s prominence as a political activist known for advocating civic accountability and transparency.
Supporters argue that the investigation may be politically motivated, aiming to silence his dissent, while critics emphasize the importance of tax compliance and the rule of law.
As the investigation proceeds, it underscores the broader efforts by KRA to enforce tax laws and address revenue leaks in the country.
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