This archive report was first published on 30 September 2019.
On September 30, 2019, the Kenya Revenue Authority (KRA) launched a probe into the tax affairs of more than 30 real estate companies in a bid to recover up to Sh20 billion.
The KRA is scrutinizing the bank records, tax returns, and transaction details of firms such as Banda Homes, Greenspan, Superior Homes Kenya, and Nexgen Office Suites, Muga Developers, and Chigwell.
The Lands ministry has also raised concerns that developers are cheating the tax system by forming separate companies to develop homes and using different ones to sell the same properties, thereby erasing the traceability of earnings.
Deputy Commissioner Edward Mbugua said the use of multiple entities to transact real estate businesses helps tax cheats to condense the magnitude of housing projects, depress profit margins, and reduce tax liability.
Mr. Mbugua cited investigations showing that most off-plan housing projects fold up phony companies after construction, transferring properties to different entities to complicate tax recovery.
Landlords are also accused of reducing the number of units or declaring occupied properties as vacant to avoid paying monthly rental income.
The KRA is mapping houses and acquiring data bases to link with the ministry of lands, Kenya power, and various water utilities to track down tax evaders.
