The Director of Public Prosecutions (DPP) has approved charges against five individuals and 12 companies over an alleged fraudulent Value Added Tax (VAT) scheme that exposed the government to losses of millions of shillings.
In a statement dated Thursday, October 15, the Office of the Director of Public Prosecutions (ODPP) said the suspects allegedly used fictitious transactions and fake electronic tax invoices to facilitate unlawful VAT refund claims and reduce tax liabilities.
The decision followed a joint review by the ODPP and the Kenya Revenue Authority (KRA) of 70 inquiry files submitted for prosecution.
Investigators established that a network of companies, commonly referred to as missing traders, allegedly generated electronic invoices for transactions that never occurred.
The invoices were then used by other businesses to claim VAT refunds or inflate tax deductions without making genuine purchases.
The DPP approved prosecution in 36 cases involving transactions valued at approximately KSh3.22 billion, with the suspected VAT loss estimated at KSh518 million.
Six cases have been prioritised for immediate prosecution, involving an estimated VAT implication of KSh17 million. The remaining cases are expected to be registered in court later.
The five individuals were also linked to the alleged registration of 70 companies suspected of facilitating the scheme. However, the ODPP did not immediately disclose the specific liability attributed to each company.
The development comes amid reports of a wider network that allegedly used fictitious electronic tax invoices worth KSh42 billion to facilitate fraudulent VAT claims running into billions of shillings.
VAT is a consumption tax collected by businesses on behalf of the government. Companies can deduct eligible VAT paid on purchases from the VAT collected on sales, but fraudulent invoices can be used to inflate deductions, secure unlawful refunds or evade tax obligations.
