The Office of the Director of Public Prosecutions (ODPP) has approved charges against five individuals and 12 companies in an alleged KSh3.9 billion fraudulent Value Added Tax (VAT) transactions scheme.
In a statement dated October 15, the ODPP explained the decision followed joint investigations with the Kenya Revenue Authority (KRA) and a review of 70 inquiry files.
“The Director of Public Prosecutions (DPP) has approved charges against five (5) individuals and twelve (12) companies linked to an alleged scheme to defraud the Government of approximately KSh 3.9 billion in Value Added Tax (VAT),” part of the statement read.
Investigators established that companies described as “missing traders” were allegedly used to generate fictitious transactions and electronic tax invoices.
In addition, other businesses are suspected of using the invoices to claim VAT refunds unlawfully or reduce their tax liabilities despite no genuine purchases taking place.
Also Read: KRA Explains Why August Invoices Are Missing From VAT Returns
Five Individuals and 12 Companies DPP Named in Investigations
The DPP identified five individuals and alleged they were involved in registering 70 companies that facilitated the scheme.
After reviewing the matter, the ODPP approved prosecution in 36 cases involving transactions valued at approximately KSh3.22 billion, with an alleged VAT loss of KSh518 million.
Further, the ODPP has prioritized six cases for immediate prosecution, involving an estimated VAT implication of KSh17 million.
The companies mentioned in connection with the cases include Renova Limited, Larigi Enterprises, Njemtar Agencies, Jeflar Construction Company, Namtek Transporters Company Limited, Jawari General Supplies and Tekaza Investment & General Supplies.
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KRA Tightens Controls on VAT Compliance
The DPP’s charges come as KRA addresses fraudulent tax claims through its VAT Special Table, introduced in June 2025 and integrated into the iTax system.
KRA Chairperson Ndiritu Muriithi earlier raised concerns about approximately 9,000 businesses that claimed to have paid about KSh39 billion in input VAT between March and April 2025, but KRA could not trace the transactions.
Following the VAT compliance failure, the authority designed a mechanism to flag VAT-registered taxpayers with specified compliance irregularities, including prolonged failure to file returns or remit VAT, failure to transition to the electronic Tax Invoice Management System (eTIMS), and suspected fraudulent input tax claims.
Taxpayers placed on the Special Table could face restrictions on filing VAT returns, while businesses dealing with listed suppliers could have their input VAT claims rejected.
Under Section 17(2) of the VAT Act, 2013, businesses may seek KRA approval for input tax claims by submitting the required supporting documentation.
However, the authority revised the policy in March 2026 after acknowledging that the mechanism had been used too broadly, affecting genuine businesses and taxpayers.
KRA announced that it would remove taxpayers listed for reasons unrelated to missing-trader schemes or tax fraud from the Special Table.
“All taxpayers placed on the special table for reasons other than the missing trader scheme or tax fraud/crime will be removed from the special table unconditionally, starting today. Relationship managers will notify the taxpayers of the removal and what is expected of the taxpayer to ensure continued compliance,” a memo dated March 10, 2026, directed.
However, restrictions would remain in force for suspected participants in missing-trader schemes, whether as beneficiaries or facilitators, and those involved in tax fraud.
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