KRA Reveals 6 Tricks Foreign Firms Use to Evade Tax

Kenya Revenue Authority (KRA) has revealed six tricks that multinational firms use to dodge paying tax.

One of the schemes involves the firms exporting very cheaply and importing good very expensively.

The authority reports that most firms also under-declare they pay to expatriates a move that reduces their profits and corporate tax in the process.

They also overprice the goods they import by invoicing for an import through a different country.

For instance, a car purchased from Japan would be invoiced from Mauritius, a tax haven and leave Kenya with no tax to collect.

Firms in the agricultural sector underprice their exports to declare meagre profits.

The parent firms also use their branches in the country to artificially strip their functions to appear as if they are doing less than they actually are which results to less charges by KRA.

The companies also exploit privileges given to them by the government when asked to provide information, including the use of their local languages in official documents sought by KRA.

In a response to the Sunday Nation, KRA stated it had recovered Ksh9.3 billion from auditing close to 150 firms in the last four years.

KRA is in the process of recovering KSh6.1 billion more.