TAX EVASION

Businessman in Sh58 million “missing trader” tax evasion scheme charged

In Summary

•The missing trader scheme is a tax fraud syndicate where a taxpayer uses several registered business names for fictitious invoicing. 

Milimani law court/FILE
Milimani law court/FILE

A businessman was yesterday charged with sh 58 million tax evasion following allegations of indulging in “missing trader” scheme.

 David Ngari Ndiritu, who is the sole proprietor of Aberdare Solutions is said to be a beneficiary of the ‘missing trader’ tax evasion scheme, a tax fraud syndicate where a taxpayer uses several registered business names for fictitious invoicing. 

 In two counts, Ngari is accused of using fictitious invoices from Bosco Enterprises and Davron Petroleum Limited to illegally claim Value Added Taxes(VAT) refunds of Kshs.14 million and KShs.6.6 million respectively.

The offences are said to have been committed between 2015 and 2018 contrary to the law.

 In three other counts,the businessman is accused of failing to declare earnings in VAT amounting to Sh 133 million hence reducing VAT liability by about Sh 21.5 million.

 Appearing before chief magistrate Martha Mutuku, Ngari denied all the charges preferred against him and sought for lenient cash bail and bond terms.

 On their part, KRA submitted that the accused is a beneficiary of the scheme where traders use fictitious invoices to depict a business transaction where there is no actual supply or movement of goods and services

 In the scheme, business entities mimic a genuine trading process by trying to meet all the legal requirements of a 'supply' for tax purposes.

 According to KRA, the traders in the business chain do not supply any goods or services but "payment" is made to create notional cost of goods sold. The scheme appears to delink and hide the final economic beneficiary of the purchases.

 The court thus released Ngari on a Sh 500,000 bond with an alternative cash bail of Sh100, 000.

The case will be mentioned on December 10.