Two directors charged over Ksh.387M tax fraud

Two people were on Friday arraigned before a Nairobi court over an alleged tax fraud scheme amounting to more than Ksh.387 million.

The accused; Vincent Somba Ndeti and Hellen Mueni Ndeti, appeared before the Chief Magistrate’s Court at Milimani where they faced eight counts of fraud in relation to tax under the Tax Procedures Act, 2015. They denied all charges.

According to the Office of the Director of Public Prosecutions (ODPP), the offences relate to deliberate misstatements in both income tax and Value Added Tax (VAT) returns between 2019 and 2022.

The court heard that the accused, as directors of Sollenti International Limited, allegedly engaged in a scheme involving fictitious purchases and under-declaration of income in a bid to reduce their tax liabilities.

In one of the counts, they’re accused of falsely claiming purchases worth Ksh.3 million in their 2019 VAT returns, resulting in a tax reduction of nearly Ksh.500,000.

In another count, they allegedly under-declared income and inflated expenses by over Ksh.220 million in their 2020 income tax filings, leading to a tax loss exceeding Ksh.55 million.

The prosecution further told the court that similar fraudulent declarations were made in subsequent years.

For the 2021 tax period, the accused allegedly claimed fictitious purchases of more than Ksh.345 million and under-declared income by over Ksh.52 million, reducing their tax liability by nearly Ksh.120 million.

For VAT filings in 2021 and 2022, the court heard that the accused continued the scheme, allegedly inflating purchases and suppressing income declarations, resulting in tens of millions of shillings in lost tax revenue.

In total, the State estimates that the fraudulent activities led to a cumulative tax loss of Ksh.387,390,338.

The prosecution maintains that the accused knowingly submitted false tax returns, actions that undermined the integrity of the tax system and deprived the government of critical revenue needed for public services.

The suspects, through their lawyer, told the court that they will not abscond court proceedings.

The court granted them a bond of Ksh.3 million, or an alternative cash bail of Ksh.500,000 each.

The case is part of ongoing efforts by the Kenya Revenue Authority (KRA) to crack down on tax evasion and enforce compliance.

The matter is set for mention and further directions as the court process continues.