The Director of Public Prosecutions (DPP) has approved charges against five individuals and 12 companies linked to an alleged scheme to defraud the government of billions of shillings through fraudulent Value Added Tax (VAT) claims.

🇰🇪 Breaking It Down

In a press statement dated Thursday, October 15, the Office of the Director of Public Prosecutions (ODPP) said the alleged scheme used fictitious transactions and electronic tax invoices to help businesses unlawfully claim VAT refunds or reduce their tax liabilities.

The ODPP and the Kenya Revenue Authority (KRA) jointly made the decision to charge, following a review of 70 inquiry files submitted for prosecution.

Investigators found that a network of companies, commonly known as missing traders, was allegedly used to generate fake electronic invoices for transactions that had not taken place.

📌 What You Need to Know

The invoices were then allegedly used by other businesses to claim VAT refunds or lower the taxes they owed, despite not having made genuine purchases.

“The fraudulent invoices were subsequently used by other businesses to unlawfully claim VAT refunds or reduce their tax liability, despite no genuine purchases having been made,” the ODPP stated.

The DPP approved prosecution in 36 cases involving transactions valued at approximately Ksh3.22 billion , with the alleged VAT loss in those cases estimated at Ksh518 million.

Of the 36 cases, six have been prioritised for immediate prosecution, with the ODPP saying that the cases involve a VAT implication of approximately Ksh17 million, while the remaining files are set to be registered in court later.

At the same time, the prosecution also linked the five individuals to the alleged registration of 70 companies said to have played a role in executing the scheme.

However, it was not immediately clear what alleged liability was attributed to each individual company.

📰 Source: Kenyans.co.ke