Former Nairobi Governor Mike Sonko Mbuvi Gideon Kioko is facing a tax demand of KSh623.39 million after the Kenya Revenue Authority (KRA) issued an agency notice seeking to recover alleged outstanding income tax arrears dating back to 2015.
The notice, dated October 12, puts the outstanding amount at KSh623,389,105 and invokes Section 42 of the Tax Procedures Act, 2015, which allows the tax authority to appoint an agent to recover tax owed by a taxpayer.
“In exercise of the powers conferred upon me by Section 42 of the Tax Procedures Act, 2015, I hereby declare you to be an agent of the above taxpayer and require you to pay me the sum of KShs.623,389,105,” the notice states.
Under the directive, you must remit to KRA funds held on Sonko’s behalf or owed to him, up to the amount specified in the notice.
The alleged tax arrears cover the period between January 2015 and December 2019. The notice breaks down the amount into principal tax, penalties and accrued interest.
Principal income tax accounts for KSh308,916,928, while penalties stand at KSh15,756,912. Accrued interest makes up the remaining KSh298,715,265, bringing the total demand to KSh623,389,105.
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How KRA Plans to Recover the Tax Arrears
The notice directs the appointed agent to remit funds belonging to Sonko, or payable to him, until the tax authority recovers the full amount demanded.
KRA further states that the notice will remain in force even if only part of the amount is paid. This means the recovery process is not concluded until the entire sum specified in the notice has been remitted.
The authority also warns that an agent who fails to comply without reasonable cause may be held personally liable for the amount stated in the notice.
“Please note in case of partial payment, this notice shall remain in force until the amount specified herein is fully recovered. Section 42(13) of the Tax Procedures Act 2015 provides that, if without reasonable cause you fail to comply with this Agency Notice, you shall be personally liable for the amount specified herein,” the notice states.
The notice identifies Sonko as the taxpayer whose alleged liabilities are being pursued and authorises the appointed agent the recover the specified amount.
KRA Uncovers Suspected KSh4 Billion VAT Fraud Scheme
The tax demand comes as KRA intensifies efforts to detect suspected tax evasion and recover revenue linked to questionable tax declarations.
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In a statement dated October 15, the authority said it uncovered a suspected Value Added Tax (VAT) fraud scheme involving 72 entities allegedly used to generate fictitious electronic invoices between 2020 and 2025.
KRA said the entities transmitted 62,869 electronic invoices through the electronic Tax Invoice Management System (eTIMS), with a combined value of KSh33.83 billion.
Taxpayers who declared purchases from the entities claimed input VAT deductions of approximately KSh3.996 billion, which the authority said was at the centre of the suspected fraud.
Input VAT is the tax businesses pay on purchases and can claim back under tax rules. KRA investigated whether the purchases declared by the affected taxpayers were genuine.
The authority said its investigations found indicators that some of the entities had not conducted genuine business despite generating large volumes of electronic invoices. Some allegedly failed to file VAT returns or submitted nil returns, while others did not file income tax returns or had no Pay As You Earn (PAYE) obligations.
KRA also reported that it could not physically locate some entities at their registered business premises and those findings raised suspicions that certain businesses may have been established primarily to generate invoices without corresponding supplies of goods or services.
According to KRA, digital forensic analysis helped investigators link the entities, electronic devices, telephone numbers, and individuals involved in generating and transmitting the disputed invoices.
The authority said it had apprehended six suspects, who could face prosecution as investigations continued.
KRA also said its investigations identified possible internal facilitation involving staff profiles. It said it was addressing the matter through internal and legal processes.
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