The Kenya Revenue Authority (KRA) has recently been on the radar after the Directorate of Public Prosecutions (DPP) secured a conviction against Cai Rongui, a Chinese national, who was fined Ksh 6 million for tax evasion.
The case involved Rongui’s failure to declare income and VAT for the years 2018 and 2019, amounting to a combined sum of Ksh 74 million.
This conviction, while making headlines, highlights an ongoing and disturbing trend in the country’s tax enforcement system.
While some may see this as a success for KRA, it raises serious concerns about the authority’s selective enforcement of tax laws.
The discrepancy in how small businesses are treated compared to large multinational companies is glaring.
Small businesses, often struggling to stay afloat, face aggressive audits, penalties, and even closures for minor tax infractions.
However, multinational corporations, many of which make enormous profits in Kenya, seem to escape such.
One company at the center of this inequality is Tecno Transsion Electronics, a giant in the mobile phone industry with brands like Tecno, Infinix, and ITEL dominating the market.
Despite its success, Tecno has been implicated in massive tax evasion schemes, allegedly dodging billions in taxes.
The company has been accused of failing to remit Pay As You Earn (PAYE) deductions and underreporting supplier transactions.
According to reports, Tecno’s financial tactics are sophisticated, involving false reporting to reduce taxable income and conceal actual profits.
As highlighted in articles by Cyprian Nyakundi, Tecno has managed to avoid up to Ksh 400 billion in taxes.
This is money that should have been contributing to Kenya’s development, but instead, it remains hidden through fraudulent practices.
The company’s approach to underreporting supplier transactions is particularly concerning.
By inflating costs or hiding payments, Tecno has managed to reduce its declared income and minimize its tax liability.
This has allowed it to continue dominating the Kenyan market while avoiding the financial responsibility it should bear.
Even more troubling is how the KRA seems to turn a blind eye to these activities.
In May 2024, a raid uncovered substantial evidence of tax evasion, including financial records and large sums of money hidden in various currencies.
However, the investigation soon stalled, and whistleblowers are now fearful of retaliation. The hope that the discovery would lead to justice has been replaced by frustration as the authorities seem unwilling to act decisively.
This is not the first time KRA has been accused of failing to hold multinational companies accountable.
KRA, under Commissioner General Humphrey Wattanga, has been aggressive in targeting small businesses, forcing them to pay taxes, sometimes even when their ability to do so is limited.
Yet, large corporations like Tecno enjoy an almost untouchable status. One cannot help but wonder if these companies have the right political connections that shield them from scrutiny.
How else can we explain the lack of action in the face of overwhelming evidence?
The discrepancy in tax enforcement is disturbing. While small businesses and hardworking Kenyans are burdened with taxes, foreign corporations evade their obligations with little consequence.
The billions of shillings avoided by companies like Tecno could have been used to improve the country’s infrastructure, health care, and education systems, but instead, these resources are diverted elsewhere.
It is evident that unless the KRA changes its approach and enforces accountability on large companies, frustration among the public will continue to build. As the situation stands, the resentment that sparked protests in 2024 could easily flare up again.
This time, the public might not remain passive. Without meaningful action, KRA risks igniting a deeper anger that could undermine the trust people have in the country’s tax system.
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