A Chinese businessman barred by Kenya Revenue Authority (KRA) from leaving the country since 2022 over alleged tax arrears of Sh83.5 million has lost a bid to overturn the travel ban.
Businessman Cai Jiupeng, a Chinese national living in Kenya, wanted to return to China in April 2022 but he was blocked from leaving the country by KRA over the tax dispute.
According to KRA, the tax arrears are owed by two companies associated with him, Huiye Kenya Trading Co. Limited and Yingluo International Trading Co. Ltd.
The companies attracted KRA’s attention after filing nil tax returns despite receiving Sh165 million in their bank account after making sales.
On April 11, 2022, Mr Jiupeng sued challenging the Departure Prohibition Order saying that he was neither a director nor a shareholder or a controlling member of any of the two companies. He said he was only a mere employee who is not in control of the Companies or their revenue.
The foreigner, who has lived in Kenya since 2019, sued the KRA and the Director of Immigration Services for curtailing his freedom of movement and that the decision caused him substantial business loss.
Further, he argued the action has also denied him an opportunity to visit and fend for his young family and elderly parents who are in China.
But the High Court in a verdict on February 4, 2025, has backed the decision of the KRA and Director of Immigration Services after finding that Mr Jiupeng was a tax representative of one of the companies, Huiye Kenya Trading Co. Ltd.
The court further found that the foreign national failed to respond to letters and summons by the KRA to provide information on the alleged tax arrears.
Justice Lawrence Mugambi ruled that KRA and the Director of Immigration Services acted within their mandate in putting preventive measures aimed at curbing possible losses of State’s revenue through tax evasion.
“The Petitioner has not provided any proof that he responded to the said letters or the summons nor evidence on how he intends to address the issue of the tax arrears. There was thus a reasonable basis for the respondent to issue a Departure Prohibition Order as a means of enabling the State to enforce the recovery of the taxes that were due from the Petitioner as the tax representative of the said companies,” said Justice Mugambi.
Additionally, the court found that the foreign national held the power of attorney of Huiye Kenya Trading Co. Ltd.
According to evidence adduced by KRA, the director of the Company, XU Huogen, appointed the petitioner and Guo Wendong to hold the power of attorney of the Company and among other things open offices and manage the same noting to observe all the governing laws of Kenya.
In the general power of attorney, they were also expected to pay all taxes, rates, rents, expenses and charges and other outgoings whatsoever from time to time payable in respect of the Company.
“KRA and Director of Immigration Services acted within their mandate in putting in motion preventive measures aimed at curbing possible losses of State’s revenue through tax evasion considering that the Petitioner is a tax representative of a Company that had substantial amount of tax arrears,” said the judge.
He stated that “Article 24 of the Constitution allows for the limitations of rights and fundamental freedoms to the extent that the limitation is reasonable and justifiable and as authorized by law”.
Mr Jiupeng had argued that the power of attorney was invalid because there was undue influence when he was executing the same and further that the donor did not sign the power of attorney. He added he was coerced and influenced to sign the said document without understanding the impact.
KRA, in opposing the petition, said that it carried out tax investigations on the said company following the information obtained from the Company’s bank over suspicious activities in its bank account.
The investigation revealed that together with Guo Wendong, the Petitioner was nominated as the Company’s signatory to the said bank account into which a deposit of Sh67,373,900 and Sh98,144,650 had been made respectively.
“We established that although there were sales made by the company, they had filed nil returns for corporation tax purposes and had failed to register for VAT obligation despite dealing with vatatable sales that reached the threshold for VAT registration as required under Section 5 of the Value Added Tax Act, 2013,” said KRA through Moses Ado.
He said the investigations led to a reasonable ground to believe that the Petitioner being the tax representative of the Company was a flight risk and could leave Kenya without addressing the company’s tax status.
Director of Immigration, through Ms Christine Kinyua told court that they received a letter from KRA dated June 9, 2021 asking them to restrain the Petitioner from leaving the country as a result of tax arrears. The Director of Immigration acted on the said instructions by activating the Petitioner’s name in the immigration PISCES system.
