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Sunday, October 24, 2021

KRA goes after economist David Ndii in 11 Million tax evasion row

Kenya Revenue Authority (KRA) has revived a tax case against economist David Ndii over unpaid taxes.

KRA had taken Ndii to court in December 2017 demanding a total of Ksh11,395,591.

According to KRA Ndii had failed to submit income tax estimated at Ksh8.4million and another Ksh2.9million arising from VAT.

The income tax dispute was then settled in an out of court deal while the Ksh2.9million was reduced to Ksh2.8million.

Additionally, the tax tribunal made a ruling declaring the VAT claim invalid stating that KRA had use the wrong procedure to notify Ndii.

KRA has now issued a notice to the High Court indicating its intention to appeal the decision of the Tax Appeal Tribunal to drop the taxman’s case against Ndii.

KRA has cited dissatisfaction with the verdict that was made by the tribunal despite the costs it will face for the appeal to pursue t Ksh2.8million.

In a report by Business Daily, KRA carried out tax assessment in September 2015 at a time when he was a strategist for the opposition National Super Alliance (NASA) led by ODM leader Raila Odinga.

The economist has since fallen out with Odinga after the famous handshake in March last year
KRA demanded that Ndii pay VAT because his business had annual gross earnings that surpassed Sh5 million.

Ndii who is also a strong government critic was not registered as a VAT agent and KRA went ahead and listed him, prompting the Sh2.8 million demand.
The tribunal ruled that KRA had erred in registering Ndii without first notifying him.

“The tribunal notes that there is no documentary evidence to show that the respondent (KRA) wrote to notify the appellant about the registration and cannot therefore retroactively demand for tax for the period under review,” it ruled.

The tribunal heard that KRA had accessed Ndii’s bank accounts to establish his financial dealings. Banks now form a key plank in KRA’s latest approach that emphasizes on data gathering from third parties like the motor vehicle registration unit, property approval agency and Kenya Power bills in the war against tax evasion.

The information sought includes account balances and flow of income. This enables authorities to check whether taxpayers have correctly declared their income.

The Tax Procedures Act compels all such third parties to share information with the taxman. Those that defy KRA’s orders are liable to a fine of Sh1 million or a jail term of three years or both should they fail to provide details to the taxman.

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