Three traders have been charged over an alleged Sh3.9 billion VAT fraud, with prosecutors saying KRA employees were among those suspected of masterminding the scheme.
The court heard that the three traders were among a wider group of businesses investigated by the Kenya Revenue Authority (KRA) over alleged fraudulent tax declarations involving Sh25 billion in lost revenue.
“We have identified the businesses through which the government has lost the much-needed revenue to finance its activities,” KRA Deputy Commissioner Sheila Sanga told the court at the commencement of the prosecution of the three suspects.
Ms Sanga, who led the prosecution, said investigators had identified the alleged masterminds of the fraudincluding KRA employees.
She said the tax authority was committed to ensuring that those implicated in the scheme were brought to justice.
Ms Sanga and KRA chief investigations manager Sylvester Okello presented the suspects before magistrate Paul Mutai.
Dorothy Gacheri Kimathi, Jefferson Wachira Nyota and Lucy Njeri Nyota denied charges of making false declarations relating to value-added tax (VAT) payable on purchases allegedly made through their companies.
Ms Kimathi was charged alongside her company, Njempta Agencies Limited, while Mr Nyota was charged alongside Jeffla Construction Limited.
The prosecution told the court that, on diverse dates between December 20, 2024, and January 20, 2025, in Nairobi, Ms Kimathi allegedly made false declarations by claiming to have purchased goods worth Sh2,852,672 from Aiselev Enterprises Limited.
The State is tightening the noose on tax cheats with new measures to raise additional revenue.
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The declaration allegedly reduced her VAT liability, resulting in a loss of Sh456,428 in revenue to KRA.
Kimathi denied the charge and applied to be released on bail, arguing that the offence was bailable and that bail was her constitutional right.
Nyota, through Jeffla Construction Limited, was accused of falsely declaring purchases of materials worth Sh3,329,145 from Hadsem General Supplies Limited.
The prosecution alleged that the VAT declaration submitted to KRA resulted in a revenue loss of Sh532,663.
In a separate charge, Nyota, Lucy Njeri Nyota and Jeffla Construction Limited were accused of participating in a tax fraud scheme that allegedly cost KRA Sh548,337 in revenue.
The court heard that, between July 1 and July 31, 2022, the accused, acting as directors of Jeffla Construction Limited, a registered KRA taxpayer, allegedly made false declarations by claiming to have purchased goods worth Sh3,427,105 from Namtek Transporters Company.
The prosecution alleged that the accused knew the declarations were false and that they reduced the company’s VAT liability, resulting in a loss of Sh548,337 to the government.
KRA prosecutors also informed the court that the Director of Public Prosecutions had approved the prosecution of five other traders and 12 companies linked to an alleged scheme to defraud the government of about Sh3.9 billion in VAT.
The prosecution did not oppose the suspects’ release on bail, saying the offences were bailable and that the accused were entitled to seek bail under the Constitution.
In a brief ruling, Mr Mutai released Ms Kimathi on a cash bail of Sh150,000, while the Nyotas were granted bond of Sh200,000 each.
The magistrate also issued arrest warrants for suspects who failed to appear in court to face prosecution.
The case will be mentioned on October 16, 2026, for further directions.
