KRA goes after Morara Kebaso over tax returns on millions earned
Political activist David Morara Kebaso.
What you need to know:
- KRA alleges that his businesses “have been declaring nil income or not filing returns despite the fact of ownership of properties, business undertakings and other assets”.
- However, Kebaso has dismissed KRA's allegations, stressing that he's a patriotic citizen who abides by the laws of the country. He has also shared certificates of tax compliance issued to him by the same Authority for the years of 2022 and 2023.
The Kenya Revenue Authority (KRA) has launched investigations into political activist Morara Kebaso for allegedly failing to file tax returns on Sh186 million made in sales by his businesses over the last three years.
In a notice sent to Kebaso, the taxman has listed five companies: Igrow Digital Enterprise, Morara Home Furniture, Luku Fashion, Morara Properties Limited (Blacksmith Morara Limited) and Backtent Security Limited.
The Authority alleges that the businesses “have been declaring nil income or not filing returns despite the fact of ownership of properties, business undertakings and other assets”.
KRA then lists three bank accounts belonging to Morara Properties Limited, Morara Home Furniture and Kebaso himself, saying they have been receiving money over the last three years.
Morara Properties and Morara Home Furniture, the taxman said, are in the real estate and furniture selling sectors respectively with deposits to the accounts mostly coming from M-Pesa paybill.
The third account, registered under him, receives money via M-Pesa mostly as payments for furniture and interior fittings, KRA said.
Kebaso: I am a tax compliant businessman
However, Kebaso has dismissed KRA's allegations, stressing that he's a patriotic citizen who abides by the laws of the country.
He has also shared certificates of tax compliance issued to him by the same Authority for the years of 2022 and 2023.
“This is nothing but a political witch-hunt. I have followed the law to the letter and I am a very tax compliant businessman. I can never think of defrauding my beloved country in any way,” he said.
Analysis of bank accounts
In KRA's analysis of the three bank accounts, which was seen by the Nation, the taxman shows that they received trade credits of Sh9.5 million in the year 2022, another Sh31.9 million in 2023 and Sh144.9 million in 2024 — bringing in a total of Sh186.3 million over the last three years.
Of the three accounts, Morara Home Furniture, with a total of Sh146.9 million, received almost 80 per cent of the entire deposits made to the three entities.
“The trade credits were compared with income tax turnover declared in the income tax returns, to which it was noted that you are a non-filer, to determine undeclared income turnover. It was noted that you are not registered for Value Added Tax (VAT),” KRA told the activist.
With Kebaso’s businesses having bank deposits above the threshold of Sh5 million, the taxman now says he will be "forcefully registered by the Commissioner as provided for in Section 34 of the VAT Act".
In its calculation, KRA also notes that Kebaso’s businesses have VAT due of Sh25.7 million.
Further, the taxman says that a margin of 12 per cent is usually calculated in businesses dealing in home furniture based on declarations of taxpayers. As such, KRA reckons Kebaso’s businesses accrued a total of Sh252,091 and Sh1.1 million in the years 2022 and 2023 respectively, totalling to Sh1.4 million in income tax.
The 12 per cent was not calculated on the year 2024 that brought in Sh144.8 million with KRA noting that the income tax for the year is not yet due.
In total, the Authority says Kebaso owes the country Sh27 million in taxes payable coming from the Sh25.7 million of VAT due plus the Sh1.37 million coming from the income tax.
KRA also lists records from the National Transport and Safety Authority (NTSA) indicating that Kebaso has four cars, a tuktuk and a motorcycle.
“These assets are owned despite declaration of nil or non-filing of income,” KRA said.
The taxman has summoned him to visit its offices in Nairobi for an interview on January 13, 2024.
“You are hereby requested to avail for examination copies of the entities' records, books of accounts and any other documents including copy of general ledger, asset register, invoices, purchases and sales ledgers, payroll records, directors accounts, debtors and creditors ledger, bank statements for both companies and the directors,” the KRA said.
