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Prepared by: Investigations and Enforcement Department Handbook Edition Taxpayer Tax Investigations Investigations Tax INVESTIGATIONS AND ENFORCEMENT DEPARTMENT INVESTIGATIONS Investigation and enforce DEPARTMENT Taxpayers’ Edition Taxpayers’ | #JUBILEEDELIVERS WWW.DELIVERY.GO.KE #GoKDELIVERS | ELIMU BORA WOTE KWA INVESTIGATIONS AND ENFORCEMENT INVESTIGATIONS PRESIDENT’S UNIT DELIVERY | #JUBILEEDELIVERS WWW.DELIVERY.GO.KE | #JUBILEEDELIVERS #GoKDELIVERS | FREE MATERNITY FREE MATERNITY FOR ALL CARE PRESIDENT’S UNIT DELIVERY WWW.DELIVERY.GO.KE | #JUBILEEDELIVERS #GoKDELIVERS | WWW.DELIVERY.GO.KE DELIVERING OIL, DELIVERING HOPE UNCOVERING Development- Tax compliance leads compliance Tax Development- to national development and delivery of quality services. of quality services. #GoKDELIVERS | KAWI SAFI KAWI WANANCHI KWA PRESIDENT’S UNIT DELIVERY PRESIDENT’S UNIT DELIVERY Investigations and enforce Ethical Helpful authorized personnel Confidentiality to those that we serve To keep taxpayers and staff To we shall engender a culture we shall engender of integrity, transparency and transparency of integrity, information accessible only to effective and supportive solutions accountability in all our operations accountability in all we shall endeavour to offer creative, we shall endeavour to offer creative, CORE VALUES: CORE Inclusion Competent and background Trustworthy Respect for skills, Respect for skills, experience, diversity experience, trust and commitment when trust and commitment relating with our stakeholders impartiality and independence we shall cultivate confidentiality, we shall cultivate confidentiality, highest levels of professionalism, highest levels of professionalism, we shall perform our duties with the prosecution guided prosecution guided of intelligence-led and of intelligence-led VISION customs administration compliance by detection, compliance by detection, voluntary tax compliance. To be the premier provider To proactive investigation and investigations that enhance investigations that MISSION prosecution of tax evasion in fosters confidence in tax and a manner that builds trust and To enhance taxpayer voluntary To INVESTIGATIONS AND AND INVESTIGATIONS ©2019 Investigations & Enforcement Department & Enforcement ©2019 Investigations ENFORCEMENT DEPARTMENT ENFORCEMENT Prepared by Investigations and Enforcement Department Tax Investigations Handbook 7 Taxpayers’ Edition COMMISSIONER COMMISSIONER GENERAL KRA Githii Mburu The Kenya Revenue Authority Revenue Kenya The an Act of by is established 469 of the Chapter Parliament, with charged of Kenya, laws of assessing, the responsibility for collecting and accounting on behalf of the all revenue The . of Kenya. Government & Enforcement Investigations Department is one of the (IED) (7) Departmentsseven within Authority (KRA), Revenue Kenya is detection, whose mandate of disruption and deterrence of tax law. violations Central & Northern Region-Nyeri Central KRA office 2nd Floor Plaza, Premier Kanisa Nyeri Road, +254-061 2032007 Tel Region-Kisumu KRA office Western House Forodha Kamas 1st Floor Road, +254 057 2024751 Tel Southern Region- Mombasa KRA office 1st Floor House, Forodha +254 041-24044 Tel KRA Region-Eldoret Office Valley Rift 4th Floor Kiptagich House, Eldoret Uganda Road, 053 2063311 Tel IED’s OFFICES AND REGIONAL PRESENCE 2 IED’s is: Address physical Our in Nairobi. Head Office is located IED’s Department Enforcement & Investigations Business Centre) Corporate (Formerly Towers Pension Ushuru Block D along Elgon Road 7th Floor, Upper Hill Nairobi 0709011765 Tel: presence: Our regional

D.K.S. Yego D.K.S. COMMISSIONER DEPARTMENT ENFORCEMENT AND INVESTIGATIONS It is my pleasure to bring you the Tax Investigation Framework for your information and information your for Framework Investigation Tax the bring you to It pleasure is my of the a detailed account give the KRA In gives framework this as taxpayers. consumption can expect taxpayers what of investigations, including: the process process investigation as the as well of taxpayers and obligations the rights under investigations, when they are a provides essence It in investigations. conduct in the of KRA officers of responsibilities while under investigations. walk to have may the taxpayer of what roadmap the Department enhance to is one of the strategies has initiated Framework This are investigation under taxpayer`s that ensure to and processes transparencyKRA’s in will be more there that desire It is the KRA’s a fair and equitable treatment. accorded confidence foster and compliance enhance to during afterand investigation cooperation processes. in the investigation MESSAGE FROM THE COMMISSIONER FROM MESSAGE

Tax Investigations Handbook 6 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Prepared by Investigations and Enforcement Department Tax Investigations Handbook 9 Taxpayers’ Edition CM-OQM CM-AREA CM- Prosecutions CM-RPS CM-CISN Commissioner Reception Board of DirectorsBoard Investigations Investigations & Enforcement Department Commissioner General Commissioner Investigations & Enforcement Investigations CM-DTIS Team B Team CM-DTIS (NBI, ELD & NYR) Chief Manager Services Protection Revenue Analysis Recovery & Evidence Asset & QualityOperations Management Unit Investigation Preliminary Section Investigations Taxes Domestic Section Investigations Nairobi Customs Investigations Deputy Commissioner Deputy Commissioner ------(Nairobi, KSM) (Nairobi, CM-DTS Team A Team CM-DTS CM-MSA RPS AREA OQM PIU DTIS CISN CM The Department is headed by the Commissioner assisted by Deputy by Department assisted The the Commissioner by is headed of and Chief Managers in charge of Investigations in charge Commissioner below: in the organogram various Divisions as shown ORGANIZATIONAL STRUCTURE OF THE DEPARTMENT STRUCTURE OF 4 ORGANIZATIONAL IED is mandated to actively investigate potential criminal potential actively to investigate IED is mandated violations of the revenue laws and related financial crimes financial related and laws revenue the of violations enhances tax compliance and fosters in a manner that system. confidence in the tax IED is mandated to actively investigate potential violations violations potential actively investigate to IED is mandated financial crimes in a manner and related laws of the revenue confidence fosters and tax compliance enhances that is actualised mandate through The in the tax system. is This of tax evasion. detection, and deterrence disruption intelligence-led guided through and prosecution achieved investigations. IED’s MANDATE 3 IED’s KRA operation on taxpayer’s premises premises on taxpayer’s KRA operation and use of on suspicion of illicit trade KRA Source: duty stamps. fake excise

Tax Investigations Handbook 8 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Prepared by Investigations and Enforcement Department Tax Investigations Handbook 11 Taxpayers’ Edition The length of The depends investigation on the scope of complexity investigation, of the issues and the of the taxpayer’s level during the cooperation investigation. nvestigations can be initiated from from initiated be can nvestigations information obtained through through obtained information mechanisms, gathering intelligence from referrals KRA systems, informers, from as well as media agencies, other other ongoing investigations. Sources of Information of Information 5.5 Sources I Length of Investigation 5.4 Length depends on length of investigation The of complexity of investigation, the scope of the taxpayer’s the issues and the level For during the investigation. cooperation take will investigation an cases, simple However, complete. to 6 months up to of each depending on circumstances take longer to might investigation case, complete. Period under 5.3 Period investigation period the for is no limitation There of in cases investigation in an covered or wilful neglect, or fraud evasion gross In circumstances, other a taxpayer. by (5) shall be made within five assessments of the last return. the date from years Double registration or use of fake number plates to evade evade to or use of fake number plates Double registration court in a prosecutable of law. of duty is an offence payment KRA/NTSA Source: Investigations Investigations can be initiated information from obtained through intelligence gathering mechanisms, informers, KRA systems, from referrals other agencies, media as as from well other ongoing investigations. Scope of investigations 5.2 Scope issues on Income cover may investigations The VAT, tax (individuals or body Corporates), and Withholding PAYE, excise, duty, Customs the KRA. by administered other taxes the full uncover to aims investigation The have facts whether tax offences determine to therefore will scope The committed. been all the associated taxpayers, individual cover beneficiaries and assets directors, companies, among others. owned the Tax Procedures Act 2015, Procedures Tax the Act (Cap. Tax the Income 470); 23 Duty Act (No. Excise The of 2015); Community the East African Management Act Customs 2004; (EACCMA) Act (No. Tax Added Value The 35 of 2013) among others. • • • • ax investigations involve inquiries into the tax affairs of a the inquiries into involve ax investigations T TAX INVESTIGATIONS 5 TAX taxpayer where the Commissioner has reasonable cause reasonable has the Commissioner where taxpayer and in tax evasion is involved a taxpayer that believe to laws. of revenue violation Department the commence, obtains investigations Once of elements the establish factsthe to needed and evidence criminalactivity perpetrators the prosecuting to view a with used, techniques Investigative taxes. the recover and partyinclude conducting third obtaining interviews, witness conducting recording surveillance, information, seizing intercepting, warrants, search executing statements, paid, not been have taxes of goods where and detention or restricted goods. prohibited counterfeit, to primary admissible evidence The gather is to focus supportoffenders tax the of conviction and prosecution is It prosecution that is noteworthy taxes. of and or recovery and of assessments Issuance collectionnot a bar to taxes. of of investigations. component is an integral collection of taxes In IED the performance of its mandate, of provisions relevant the by guided is 2010. of Kenya, the Constitution Laws relied upon relied 5.1 Laws the mandate, IED’s realize In to order Department the following administers laws:

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 10 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 13 Taxpayers’ Edition PROCEDURE OF INVESTIGATIONS 7 PROCEDURE time (either any at commenced maybe Investigations is actionable where overtly intelligence or covertly) in tax involved is a taxpayer that indicating availed the following; involve Investigations evasion. Preliminary Investigation conductedreceipt upon are investigations Preliminary ascertain to of the in order the veracity of information If the information of tax evasion. that allegations satisfied registered a case is investigation, warrant to is sufficient investigations. for Surveillance conducting carriedis by out investigation The business premises, surveillancethe taxpayer’s on parties third and other premises, agent’s tax residences, the identify aim is to The be necessary. may as premises custody in the taxpayer’s documents of business, nature assist in tax may that such other information and gather inspectionThe conducted will be in investigations. fraud ethical manner. and a professional The investigation is carried out conductingby surveillance on the taxpayer’s business premises, residences, tax agent’s thirdpremises, parties and other premises beas may The necessary. identifyaim is to the nature of business, documents in the taxpayer’s custody and gather such other information assist may that in tax fraud investigations. (Done through interviews, surveillance, execution of search of search execution (Done interviews, surveillance, through warrants, analysis of financials, review of taxpayer records, and obtaining of records, of taxpayer review analysis of financials, warrants, partythird information). the schemes and dismantling Disruptiontax evasion (aimed at identifying the perpetrators, in such schemes including involved cartels and all the players among and facilitators collaborators used, the system enablers, professional of departure includes; Issuance measures Some of the enforcement others. and preservation, asset caveats of funds, preservation orders, prohibition of PINS, revocation deactivation of TCCs, cancellation of agency notices, issuance of and prosecution arrest surveillance, continuous agents licences, of customs offenders). activities ensure to and other fraudulent (against tax evasion Deterrence education taxpayer imposition of penalties, prosecution, through compliance as media publicity as well among others) and awareness unearthing schemes (through evasion emerging Enhancing compliance action or administrative seal loopholes through to measures and recommend amendment of laws) Detection The objectives are to undertake tax investigation activities undertake : to aimed at objectives are The tax investigation o o o o  OBJECTIVES OF TAX INVESTIGATIONS TAX 6 OBJECTIVES OF The president witnessing the destruction of contraband sugar witnessing the destruction of contraband president The

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 12 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 15 Taxpayers’ Edition Multi-Agency Team (MAT) Multi-Agency Team KRA & DCI by operation on a factory suspected engage in illicit trade to syndicate. and tax evasion KRA Source: Upon completion of investigation: of investigation: Upon completion issues a the Commissioner due, found are taxes Where a. the either pay can and the taxpayer of assessment notice or object and appeal against tax demanded if in agreement section to decision pursuant 51 of the the Commissioner’s 12048 of No. Notice Act 2015 and gazette Procedures Tax 2018; or 19th November of allegations the confirm the investigations Where b. After completion of the investigations, investigation findings bemay communicated in the course of investigations during engagements with the or via taxpayer letter. a formal KRA officers KRA officers analyzing on the documents computer. Upon gathering enough evidence the investigation team team the investigation enough evidence Upon gathering prepares a reportprepares either civil or criminal recommending action against the taxpayer. Notice to investigate to Notice informing the taxpayer issued to is a notice preliminaryAfter investigations, for the reasons and outlining investigations under are he/ she/they them that lost. of taxes amounts as the potential as well such investigations Documents Request for electronic (including records may obtain the officers During Investigations, parties to third examination or directly from for the taxpayer from format) can be obtained via information This of the taxpayer. establish the tax affairs use of court obtained will ordinary Information or through warrant. requests with confidentiality. be treated of records Analysis self-declaration the taxpayer’s against then analysed obtained are records The establish the actual to liability. tax information other available and any if any, of Statements Interviewing and Recording other persons of and any the taxpayer from be recorded may Statements the case being investigated. to interest of Investigations Finalisation

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 14 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 17 Taxpayers’ Edition The Commissioner is also empowered to to is also empowered Commissioner The hold as security asset such as land an who a taxpayer by or a building owned is This of tax. in payment has defaulted on subject placing caveats done through properties by and other assets owned and beneficiaries. taxpayers and prosecution c) Arrest evidence is sufficient there Where the offence, of a tax of commission involved person other any and taxpayer an offence of such in the commission in a court will be prosecuted of law due. of taxes notwithstanding payment to bar a not is prosecution that Note A suspect in court arraigned on alleged KRA Source: of a tax offence. commission control and record statements from relevant persons. persons. relevant from statements record and control or obstructto hinder in Itcarrying the officers is an offence duties under the out their laws. revenue off, put under seal detain, seize, possession, photograph, take may secure, officers The persons. relevant from statements and record control and customs excise or obstructto hinder in Itcarrying the officers is an offence duties under the out their laws. revenue during investigations Security taxes b) for the concerned ensure to taken are steps due, of taxes purposes of securing payment For stage of the investigation. any be done at may This furnishes the tax due. security for taxpayer of tax by payment commit to the taxpayer requiring does this by Commissioner The securityof Commissioner. the by form other determined any or furnishingguarantees bank in most cases are processes the two In this regard, versa. and vice of taxes payment under investigation who are In some cases taxpayers concurrently. progressed and initiated process. the investigation bond) throughout be bonded (police to will be required rights, powers, all have KRA officers tax laws purposes of administering for Note, of Criminal the Director Further, officer. privileges and protection of a police Protection Services to to the Unit Revenue officers his (DCI) has seconded Investigations function. the investigative complement and Interests of Penalties Waiver d) provides the law in a court and prosecuted of law, has been charged a taxpayer Where the of the principal taxes, In cases upon payment non-fraud be waived. penalties to for and the same of penalty liberty is at and interest waiver taxpayer for make an application to and established procedures. as per the law will be processed e) Compounding the under the law, an offence of compounding has applied for a taxpayer Where and in the investigations cooperated has such taxpayer that if satisfied may, Commissioner such grant due, the case and paid taxes to of factshas made full and true disclosure relating the offence. for prosecution person, immunity from Where thereWhere is sufficient ofevidence of acommission thetax offence, and taxpayer other personany in the involved commission of such an offence will be prosecuted in a court of law notwithstanding of taxes payment due. Multi- Agency Team operation media briefing operation Team Multi- Agency KRA Source: the Inspectorby of Police. source: KRA source: KRA being interviewed officers by A taxpayer a) Access to Premises and search Premises to a) Access with KRA officers allows law The search and into enter to warrants including but premises taxpayer’s offices, residential, to not limited factories, industries, homes, private or laboratory, warehouse, vehicles, data, and seize other location any purposes for and equipment records of examination. may inspect all goods, officers The records, and devices equipment, of or control whether in the custody corporate or of a body a public officer, other person, and may or of any make extracts of those or copies from take may secure, officers The records. detain, seize, possession, photograph, and customs excise put under seal off, POWERS OF THE COMMISSIONER THE COMMISSIONER OF 8 POWERS tax evasion, the Commissioner may initiate criminal proceedings criminal proceedings initiate may the Commissioner tax evasion, against the taxpayer. of discloses the commission investigation where Additionally, c. refer may Commissioner the crimes and other offences economic agency. enforcement law the relevant to the matter Offer of settlement during an disclosures makes voluntarily a taxpayer Where with the of settlement an offer into or enters investigation as compounded be may committed offence the Commissioner, settlements Further laws. revenue under relevant for provided Dispute be undertakenmay the established Alternative through Resolution mechanisms.

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 16 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 19 Taxpayers’ Edition Officers carrying out investigations shall identify themselves as being Officers themselves carrying shall identify investigations out cards; staff identification by showing KRA officers the investigations; for of the purpose and reasons be informed To courtesy with respect KRAcommon and officers; by be treated To respect in of their expect within the applicable laws confidentiality To privacy;personal right to and its implementation; rule or legislation seek clarification on any To on all issues pertaining information IED operations to seek and receive To get an opportunityand to criticise question and constructively IED to communicated have servicesofficers IED which in manner the and levels with taxpayers; of whether the just and impartial regardless treatment expect fair, To or committed complained with the KRA decisions, has agreed taxpayer an offence; in law; object as provided and appeal against a tax decision To expect consistency of the law; application in and To or tax tax agent an advocate, by and advised be represented To of taxes of payment the responsibility that note However, consultant. lies with the taxpayer. ultimately and liability thereof and Helpful. Ethical Competent, of being Trustworthy, values 2. 3. 4. 5. 6. 7. 8. 9. 10. core by the willobserving KRAIn be guided officers of taxpayers, rights these Taxpayers Rights Taxpayers 1. Rights TAXPAYERS’ RIGHTS AND OBLIGATIONS UNDER UNDER AND OBLIGATIONS RIGHTS TAXPAYERS’ 10 INVESTIGATION The lengthThe investigation. of investigation of investigation depends on the scope of investigation, of thecomplexity issues and the level you of cooperation professional and your duringadviser render the ENFORCEMENT MEASURES 9 ENFORCEMENT DURING AND AFTER TAKEN INVESTIGATIONS offenders of and prosecution a) Arrest Recoveryb) of debts Orders of Departurec) Issuance Prohibition of agencyd) Issuance notices of Funds e) Preservation f) caveats Asset TCC of g) Cancellation h) Deactivation of PINS clearance of cargo i) Stoppage surveillance among others. j) Continuous

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 18 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 21 Taxpayers’ Edition Taxpayer’s conduct and Taxpayer’s during cooperation the course of the will be investigation consideration into taken when the Commissioner the determines of outcome appropriate and the investigation for recommendation of penalties and waiver interest. CONDUCT OF TAXPAYERS UNDER UNDER TAXPAYERS OF CONDUCT It is an offence to hinder or obstruct It is an offence the officers in carrying out their duties be liable on shall guilty A person of such offence, laws. under the tax for a or imprisonment Ksh.1,000,000/=; exceeding conviction not a fine to or both. 3 years; exceeding not term 1,000,000 INVESTIGATION 12 a) Cooperation be undertaken will with or without investigation The conduct taxpayer’s A voluntary cooperation. taxpayer’s of the investigation during the course and cooperation when the Commissioner consideration will be taken into of the investigation outcome appropriate the determines interest. of penalties and waiver for and recommendation and Information Premises to access Permit b) to obtain information, KRA officers allows law The to all access full and free to have specifically the power and documents. data records, places, buildings, lands, devices may inspect equipment, all goods, officers The public a of control or custody the in whether records, and any other person, and or of corporate or of a body officer, make extracts of those records. or copies may from obstruct or hinder to in carrying officers the Itoffence an is A person guilty laws. out their duties under the revenue to a fine not conviction shall be liable on of such offence, not term a for imprisonment or 000/=; 000, Ksh.1, exceeding or both. 3 years; exceeding Information c) Provide documents and information any provide to required are You will You request. reasonably Officers may Investigation that our to respond of time to amount a reasonable be given requests. and provide you information any that should ensure You Under the correctcomplete. and are give you answers any can result provided or information false statements law, prosecution. with a view to in a criminal investigation party (including third information provide to failure Further, laws. revenue under an offence constitutes information) Records d) Maintain under required document any maintain to required are You ascertained. tax liability be readily to enable your to a tax law a for the document retain to required are you In this regard

Submit all relevant information accurately in order to to in order accurately information Submit all relevant assess tax liability correctlyenable us to as per the law To register for a tax PIN and in the case of a business whose annual a tax PIN and in the case of a business whose for register To and obligation VAT the for register to 5million and above is Kes. turnover use of ETR ; on time; Submit returns of tax on time; of the correct amount Make payment according facilities, appropriate providing by with KRA officials Cooperate as they carrythem due respect and freedom duties; out their lawful be may that on all matters Maintain up-to-date records and accurate financials and business; to relevant In the objection lodge case of an objection to a tax assessment, to objectionthe be to for amount undisputed the pay to time and within lodged; as validly considered mistakes promptly;of any Notify the commissioner enable the to in order accurately information Submit all relevant assess tax liability to correctly as per the law;commissioner the commissioner; before appear Honour summons to do so; to when required witness statements Record and or our officers; any doing by report wrong any Promptly laws. with revenue yourself acquaint To purposes taxation for tax laws by as required Maintain records

TAXPAYERS OBLIGATIONS TAXPAYERS Obligations 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 11

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 20 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 23 Taxpayers’ Edition of the following month of the following month of the following day of the following month of the following th th th day of the fourth after day month the end of the of the fourth after day month the end of the th th accounting period accounting paid on or before and balance in instalments Payable the accounting following month of the 4th 20th day the end of the 6th filed on or before Returnsperiod. are period the end of the acounting following month 20 period accounting for of application of lodgement date the On or before Lands Office the relevant 20 On or before SUBMISSION TIMELINE 29 On or before 20 On or before 9 On or before Recovery unpaid taxes by way of suit. way by Recovery unpaid taxes land or building Security e.g on taxes of unpaid tax the recovery for orders Distress parties third a taxpayer collecting money to tax from owing agencythrough notices further Extension for period 10 days. of funds for Preservation court. done through (30 days) of goods and forfeiture seizure and detention Arrest of offenders Prosecution Orders of DepartureIssuance Prohibition & seize search to Power to etc premises vehicles, vessels, goods, distrain to Power back taxes. even taxes, recover vessels; & search enter to power to vehicles vessels, goods, & forfeiture seize search, to Power crime & tax evasion. do not benefit from delinquents ensure individuals; prosecute even & arrest; search stop; to power Enforcement methodology Enforcement Annually Annually Transaction Based Monthly FREQUENCY OF FILING Monthly Annually Monthly Section 39 TPA Section 39 TPA Section 40 TPA Section 41 TPA Section 42 TPA Section 43 TPA TPA Section 44 TPA Section 7 of TPA Section 57 &107 TPA Section 45 Section 60 TPA Section 130 EACCMA; Section 152 EACCMA; Sections 210 – 216 EACCMA: Section 155 & 156; EACCMA Provision of the law Provision Corporation Corporation Tax Income Tax (Individuals) GainsCapital Tax Duty Excise RETURN TYPE V.A.T Withholding Withholding Tax P.A.Y.E Tax Obligations and Timelines for Filing Returns Filing for Timelines and Obligations Tax Annexure 2: In the course of investigation and for purposes of ensuring security and recovery of taxes, investigators investigators purposes of ensuring security of taxes, for and and recovery In of investigation course the measures. undertake enforcement the following ANNEXURES ANNEXURES Annexure Mode 1: of Enforcement The taxpayer is required to maintain high level of integrity. of integrity. maintain high level to is required taxpayer The to serveare under a duty officers taxpayers Investigation and credible in a transparent and conduct investigations manner. Businesses and business all accounting requires the Commissioner businesses, For vouchers payment invoices, such as contracts, documents source records, and bank statements all the transactions, substantiate that and receipts records. data including digital evidence payment Individuals and records all documents requires the Commissioner individuals, For as pertaining and assets acquired income to records) (including digital incurred. as expenses well i. ii. While under investigations, the taxpayer is required to maintain high level high level maintain to is required the taxpayer under investigations, While and are under a duty to serve officers taxpayers Investigation of integrity. involvement Any manner. credible and a transparent in conductinvestigations an offence to will amount investigations will compromise in a manner that in a courtprosecutable of law. 13 INTEGRITY period of five (5) years from the end of the reporting the the end of relates years from to which it period (5) period of five an that note or such shorter . However specified in a tax law be period as may there period cases where in the 5 year beyond records will require investigation a taxpayer. or wilful neglect, by or fraud evasion is gross

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 22 Taxpayers’ Edition Prepared by Investigations and Enforcement Department Tax Investigations Handbook 25 Taxpayers’ Edition Fine =< 1m or imprisonment for a term =< 3 yrs a term for =< 1m or imprisonment Fine both. or to =< 3 yrs a term for =< 1m or imprisonment Fine both or to =< 3 yrs a term for =< 1m or imprisonment Fine both or to Penalty/sanction years. five not exceeding a term Imprisonment for Imprisonment ≤3yrs or fine ≤$2,500 or both. to 50% the a fine equal ≤ 5yrs or to Imprisonment for or both. of the goods involved value to 50% the a fine equal ≤ 5yrs or to Imprisonment for of the goods involved. value a fine ≤ $10,000 ≤ 3yrs or to imprisonment for $5,000 or the court impose a may not exceeding Fine goods value of any times the three exceeding fine not in question. $2,500. not exceeding Fine Failing to deduct and account for PAYE. for deduct to and account Failing withholding tax. VAT, Withholding for deduct to and account Failing ETR. to in relation regulations with any comply to Failure as such or holds while he is qualified VAT as a taxable person for register to Failure has been cancelled. himself as so when his registration Manufacturing of excisable goods without license or unspecified premises. Manufacturing goods without license of excisable manufactured goods. excisable for account to Failure of manufacturing another person. to license Transfer and books of or records and measuring metering devices keep and maintain to Failure goods. of excisable accounting necessary proper account for products authority stamps without in possession of excisable or being excise Acquiring stamps without excise Failure to appear before the before appear to Failure Commissioner. Hindering or obstructing the or an authorised officer Commissioner in the performanceduties. of his Offences of any contravene Conspiracy to (S. 193) of EACCMA. the provisions defacing customs or Removing seals. Importing restricted prohibited, goods. and uncustomed to import Offence export or goods concealed to make or use false Offence documents etc documents, produce Refusal to with customs to interfere Offence gear Failure to provide information information provide to Failure for document any or produce the by as required examination Commissioner. Some of the VAT/PAYE Related Offences Related VAT/PAYE Some of the • • • • Common Customs Offences Customs Annexure 4: Common Offences Some of the Excise • • • • • Penalty/sanction KES that but not more per month KES 100,000 1Million which the to payable 10% of the amount the for no tax is payable Where relates. document reporting KES 100,000 shall apply as the period, penalty. or due of 25% of the amount – the higher PAYE KES 10,000 other – KES 5,000. In the case of any Tax Turnover or KES the higher of 5% of the tax payable return- 20,000 KES – 100,000 Double the tax liability of KES 10 million or double the tax evaded, Fine a term for imprisonment higher or to is whichever both. or to years, ten not exceeding to a fine or tax evaded to double the A fine equal imprisonment for is higher or to =< 5m whichever both. or to =< 5 yrs, a term =< 3 yrs, a term =< 1m or imprisonment for Fine both. or to =< 3 yrs, a term =< 1m or imprisonment for Fine both. or to =< 3 yrs, a term =< 1m or imprisonment for Fine both. or to whichever =< 10m or double the tax evaded, Fine or =< 10yrs, a term is higher or imprisonment for both. to not a term =< 2m or imprisonment for Fine both or to 5 yrs, exceeding not a term =< 2m or imprisonment for Fine both. or to 5 yrs, exceeding not a term =< 2m or imprisonment for Fine both. or to yrs. 5 exceeding not a term =< 2m or imprisonment for Fine both or to yrs, 5 exceeding Offense tax for or deregister Register to Failure purposes and records retain to Failure documents submission of returns Late with electronic tax comply to Failure system Avoidance Tax returns, from Omission of income or of income, under declarations defaults on an obligation deliberately a tax law imposed by a tax create to a taxpayer Assisting or abets or aides a scheme, avoidance tax. evade to taxpayer during documents maintain to Failure a reporting period. or other submit tax return to Failure due date. by document tax. pay to Failure returns. from Omission of income issued with a notice comply to Failure under section 42. for with an order comply to Failure preservation of funds issued under section 43 Departing depart to or attempting of a in contravention Kenya from departure order. prohibition tax liability a transferred pay to Failure under section 46 as required Common Offences and penalties Offences Annexure 3: Common

Prepared by Investigations and Enforcement Department Tax Investigations Handbook 24 Taxpayers’ Edition Investigation and enforce DEPARTMENT Taxpayers’ Edition Taxpayers’ Framework Investigation Investigation Tax Tax INVESTIGATIONS AND ENFORCEMENT INVESTIGATIONS Development- Tax compliance leads compliance Tax Development- to national development and delivery of quality services. of quality services. INVESTIGATIONS AND ENFORCEMENT DEPARTMENT Tax Investigation Framework Taxpayers’ Edition

This handbook is a guide to the taxpayers on their expectations and a glimpse into our investigations process. Whenever there's any ambiguity or inconsistency with the applicable laws, the applicable laws shall take precedence.

Prepared by: Investigations and Enforcement Department

ISO 9001:2015 CERTIFIED