•Senior managers at KRA have been sent home
•Treasury on spot over some of the waivers
Image: George Murage
The Parliamentary Committee on Finance and National Planning has given KRA seven days to furnish it with a list of all individuals and companies who benefitted from tax waivers, exemptions, and abandonments.
This is for the last two years period.
The committee took issue with the authority over the manner it was dealing with the issue, where the country allegedly lost over Sh200 billion.
This emerged over the weekend during a highly charged meeting between members of the committee and senior officers from KRA, at the Lake Naivasha Simba Lodge.
During the meeting, it emerged that the National Treasury, which was supposed to support revenue collection, gave waivers, exemptions, and abandonments despite opposition from the revenue body.
According to the committee chairman Kimani Kuria, the country has failed to meet its budget projections in recurrent financial years, due to " "illegal" waivers and exemptions.
Addressing the press at the sidelines of the meeting, he said that the majority of the waivers, exemptions, and abandonments were conducted between 2021 and 2022.
Those who benefited include powerful individuals and ministries, a Chinese company, and organisations run by powerful individuals in the country.
“We are not satisfied by the information given by KRA as we want to know who these demi-gods are, as many youths have been denied tax compliance certificates but rich individuals are been exempted,” Kuria said.
“We have ordered KRA to come back in seven days with all the names of individuals and organisations that benefited from these illegal waivers and exemptions,” he added.
The outspoken Mp pointed an accusing finger at Treasury for ignoring advice from KRA and giving abandonments even on PAYE, excise duty, and VAT.
“Some of these companies had collected taxes on behalf of the State and all that was required was to remit it but people in the Treasury and in abuse of power gave them abandonments,” he said.
During the meeting, the committee took issue with a contract entered between KRA and Swiss company–SICPA, which is behind the printing of excise stamps.
Kuria said that the country lost Sh4.1 billion when the foreign contractor charged Sh1.80 for a stamp, only for KRA to sell the same at 50 cents.
“The contract was entered in Euros which is illegal and the contractor has now agreed to lower the charges to Sh1 per stamp, which raises more questions than answers,” he said.
Kesses Mp Julius Ruto who is a member of the committee said that the country lost over Sh200 billion through the tax waivers.
Ruto noted that the Ministry of ICT was among the beneficiaries of the exemptions in a multi-billion project involving a Chinese company.
“We have come to learn that over 90 per cent of these tax waivers and exemptions were given during the election year,” he said.
The Mp noted that due to the illegal exemptions and waivers, the government has had challenges meeting its budget expectations, leading to higher taxes among mwananchi.
He said that there were cases where one organization was given a waiver of Sh14 billion leading to a fallout between KRA and the Treasury.
“In some of these cases, Treasury ignored advice from KRA in collecting VAT, PAYE, and Excise duties from some companies and went ahead to give abandonments,” he said.
Ruto revisited the duty stamp tender adding that they would investigate deeper to know the beneficiaries and why a foreign company was sourced.
President William Ruto raised concerns in October last year, saying Kenya loses revenue in the manufacturing industry as a result of the use of fake stamps on products, in a racket that involves rogue businessmen and KRA insiders.
The President said the lost revenue is ending up in the pockets of people behind the production and use of the fake revenue stamps.
"Part of our revenue gets lost because of the stamps that you use on your manufactured goods. Part of why our contribution of manufacturing to GDP is low is because many people pocket money meant for taxes," Ruto told a forum in Nairobi.
According to the President, Kenya is selling 2.9 billion stamps for excisable products, while our neighboring Tanzania is selling 7.2 billion stamps and Uganda is selling 9 billion stamps.