This archive report was first published on 1 October 2019.
On October 1, 2019, the Kenya Revenue Authority (KRA) initiated a probe into over 30 real estate companies in a bid to recover up to Ksh20 billion in unpaid taxes.
The taxman is reviewing bank records, tax returns, and other transaction details of the firms, including Banda Homes, Greenspan, Superior Homes Kenya, Nexgen Office Suites, Muga Developers, and Chigwell.
According to Mr. Edward Mbugua, a deputy commissioner in the domestic taxes department, KRA officials are working hard to recover all unremitted taxes.
Mr. Mbugua pointed out that the Lands ministry had raised concerns about real estate firms evading tax payments, particularly in huge real estate projects where contractors and other professionals fail to declare income earned from development in their annual tax returns.
"There is non-payment of taxes on development of huge real estate projects where the government is denied three percent withholding tax on contracts by the contractors and other real estate professionals," Mr. Mbugua said.
He added that KRA has discovered elaborate schemes involving the formation of separate companies to develop homes and use of different ones to sell the same, making it difficult to track earnings from the business.
The taxman is racing to bring more people into the tax brackets and curb tax cheats and evasion in the quest to meet revenue targets that it has persistently missed in recent years.
Mr. Mbugua said that Kenya Power meter registrations are helping the taxman to identify landlords not remitting tax, some of whom have been slapped with huge tax demands.
The authority recently hired a team of auctioneers to help it track properties of individuals and companies who have failed to pay the tax due, with plans to auction the properties to help clear mounting tax arrears.
