I think one of the greatest risks for investors, business people is taxation. We should have a group for Tax discussions, issues and advice. Issues to do with tax audits, customs duty etc...

I have seen queries on customs duty especially from Chinese imports that seem to be on the spotlight by KRA customs offices.

Now for those intending to build, especially commercial buildings, note that KRA income tax officers are going round building sites and taking down approval numbers. With this, they then go to county planning offices and retrieve your PIN. With this they produce your tax returns and determine if you are compliant or not. If you do not file properly or do NIL returns, they summon you with printed bank statements (which they already have) and extort money from you! Beware

"Extorting" implies they try to collect a bribe. Are you saying it does not happen?

I also would like us to discuss the various known ways of tax evasion that are not wise to engage in for us at all. For example, why is that if you import goods from China, one pays for courier charges by weight and not by value where goods are ferried via Eldoret Airport and collected in Eastleigh? Is this not tax evasion? Isn't it a big risk to engage in it since IDF documents and proof of taxes paid is not available?

No. Tax avoidance is legal and fully auditable with supporting documents. That means that a tax investigator can randomly pick an item from your shop and with the serial numbers, get supporting import documents for it. The Eldoret route must be an illegal activity and therefore tax evasion. Somebody should clarify.

Thank you Bennry. However, on the issue of imports from China through Eldoret to Eastleigh, what are your comments on this?

Gathige. I am not a KRA sleuth and will never be. I believe that we should pay our legally spelt out taxes as law abiding citizens and that the Government should use our taxes prudently and with transparency and accountability. They should not create parallel panya routes that make it difficult for law-abiding business people to do business. If an item is charged 100% additional charges as taxes if cleared under IDF system and another just pays for shipping and handling only, how will the law abiding citizen compete effectively?

It is worth discussing it.

My take is that you will be penalized for not filing tax returns. Remember that KRA also wants to collect more taxes from you in case you have some side hustles like farming, shops and others where tax is not deducted at source. If they find that you have other undeclared income they will charge you penalties and interest for the unpaid extra tax. The employer will have done his part by deducting and remitting the tax to KRA and giving you your P9 form to file.

Why can't KRA give tax refunds to those who've complied? It is very discouraging to consistently file tax returns yet you never get refunds despite doing follow-ups upto the headquarters!!

Refunds are not automatic and they might require further assessment/ audit before ant refunds are made. In fact you might be forced to pay more taxes and penalties after they do due diligence and review your bank statements and those of companies where you are a director (using your KRA PIN they will easily establish this)

I understand cargo consolidation but I doubt it is supported in any tax law. I understand that KRA tried to ask for details of clients of cargo consolidation companies where they latter refused. This was meant for KRA to start charging by value of goods.

In addition, the KRA guys go to the shops and ask the sellers of (especially serialized goods like electronics) to produce IDF documents. If you do not have, you will be charged with tax evasion. Check this fact out.