ENHANCEMENT OF PROSECUTION CAPACITY

KRA’s measures to enhance its ability to prosecute tax cases, has started yielding positive results following its winning of cases with a tax liability of Kshs. 220 million over the last six months.

KRA prosecution capacity was enhanced last year with the gazettment of six prosecutors by the Attorney General.  The Authority is currently consulting with the Attorney General to have more of it’s own prosecutors gazetted. The lawyers are gazetted as prosecutors for the purpose of revenue offences.  They discharge their mandate just the way the state councils who prosecute criminal matters do.

With secondment of CID officers to KRA and housed by the Investigations and Enforcement Department, the authority has capacity to carry out arrests using the lawful authority.  KRA also established a Business Intelligence Unit as a proactive measure to identify and deter tax frauds before they occur.  The Authority also continues to use the services of the prosecutors for the Attorney General’s office to supplement its efforts.

The combined use of these apparatus has enabled KRA to register substantial wins in court cases. Among the cases include:

• Injunction by Prime Bank for KRA not to collect Kshs. 14,999,000 in outstanding bond which secured petroleum products on behalf of Triton Petroleum Ltd.
• Settlement of tax arrears totaling Kshs. 12,545,396 owed by Africa Safari Club.
• Appeal by Pili Management Consultants against High Court decision dismissing an application seeking to quash an urgency notice served upon Ms. City Bank to collect Kshs. 50 million which was found in the appellants account.
• Appeal by Great Lakes Company Uganda Ltd seeking compesation for loss of business to the tune of Kshs. 49 million.
• Surrender of Kshs. 3,340,000 in taxes directed to an account held at Paramount Bank by the bank’s client.
• Suit filed by a Mr.Stephen Ndirangu to stop KRA from collecting Kshs. 61,394,944 in VAT arrears.
• Appeal by Stanbic Bank Ltd against High Court ruling allowing KRA to collect taxes of Kshs. 7,954,342 in respect of Management and Professional Services rendered by Reuters (UK).
• Case against seven people in respect to underpaid duty on motor vehicles they imported through a third party.

KRA is determined to ensure that tax offences especially those tending to contain element of tax fraud or economic crimes are successfully prosecuted.  Indeed of late the Authority has been prosecuting tax fraud under he Economic Crimes Act.  While under revenue acts one can be jailed for up to six months, under the Economic Crimes Act, jail term has a ceiling of ten years.  Therefore cases that fall within the definition of economic crimes under the Anti Corruption of Economic Crimes Act will be prosecuted in the Anti corruption courts.

We will continue to use the divisions of the courts as currently established for the time being, but we will follow up with rules committee on any other benches of divisions that we may feel would be necessary for expedient determination of tax cases.