The Kenya Revenue Authority (KRA) has uncovered a tax fraud scheme in which businesses used fake invoices to claim nearly Sh4 billion in value added tax (VAT) deductions between 2020 and 2025.KRA said 72 companies generated 62,869 electronic invoices worth Sh33.83 billion through the electronic Tax Invoice Management System (eTIMS).
The invoices carried VAT of Sh5.37 billion, while businesses that claimed to have bought goods and services from the companies claimed Sh3.996 billion in input VAT.Investigations found that several of the companies had not filed tax returns, had no genuine business operations or could not be found at their registered addresses.
The taxman has sent 57 investigation files to the Office of the Director of Public Prosecutions (ODPP), which has approved the prosecution of 42 individuals, companies and company directors. Six suspects have been arrested.The authority has started rejecting unsupported VAT claims, recovering the taxes owed and disabling electronic invoicing devices linked to the scheme.
KRA has warned businesses that knowingly use fake invoices to reduce their tax bills that they could face criminal charges and financial penalties.
