Criminal Tax Offences Under The Kenya Tax Procedures Act

Under the Kenya Tax Procedures Act (Cap. 469B), a wide range of actions constitute criminal tax offences, each detailed in its own section with specific elements and sanctions. These offences are distinct from administrative penalties and are subject to prosecution in court, potentially resulting in fines, imprisonment, or both.

Section 90: Failure to Register or Deregister makes it a criminal offence for a person to fail to apply for registration, deregistration, or cancellation of registration as required under a tax law. This serves as the criminal counterpart to the administrative penalty in Section 81.

Section 91: Offences Relating to PINs criminalizes two key actions. Subsections (1) and (2) make it an offence to use a false Personal Identification Number (PIN) on any tax return or other document used for tax purposes, which includes using another person’s PIN without proper authorization. Subsection (3) further makes it an offence to obtain a PIN by fraud, using a false or forged document, or by misrepresentation or deceit.

Section 92: Offences by Tax Agent specifies criminal conduct for licensed tax agents. An agent commits an offence if they fail to notify the Commissioner of ceasing business as required, contravene the restrictions on unlicensed practice, or—most seriously—assist a taxpayer to create a tax avoidance scheme or abet or aid a taxpayer to evade tax. Conviction under this section can lead to a fine of double the tax evaded or five million shillings (whichever is higher), imprisonment for up to five years, or both.

Section 93: Failure to Maintain Documents outlines three document-related offences. Subsection (1) makes it an offence to fail to keep, retain, or maintain a required document without reasonable excuse. Subsection (2) criminalizes the deliberate preparation or maintenance of false documents, or authorizing another to do so. Subsection (3) makes it an offence to falsify any document related to a tax law.

Section 94: Failure to Submit Tax Return or Other Document establishes that a person commits an offence if they, without reasonable cause, fail to submit a tax return or any other document required under a tax law by the due date. Upon conviction, the court may also order the person to furnish the missing document.

Section 95: Failure to Pay Tax simply states that a person commits an offence if they fail to pay a tax by its due date.

Section 96: False or Misleading Statements criminalizes deliberate deception. A person commits an offence when they knowingly make a statement to an authorized officer that is false or misleading in a material particular, or knowingly omit any matter from a statement making it false or misleading.

Section 97: Fraud in Relation to Tax defines the most serious category of fraud offences. A person commits an offence if they knowingly omit income from a return, claim a relief or refund they are not entitled to, make an incorrect statement affecting their liability, prepare false books of account or records, or deliberately default on any tax obligation. The sanction for this offence is severe: a fine of up to ten million shillings or double the tax evaded (whichever is higher), imprisonment for up to ten years, or both.

Section 98: Offences Relating to Recovery of Tax criminalizes acts that obstruct the Commissioner’s collection powers. A person commits an offence if they, without reasonable cause, contravene the duties of an appointed person (e.g., a liquidator), fail to provide security, rescue property under distress or goods seized, destroy property or documents to prevent seizure or discovery, fail to comply with a High Court preservation order, depart Kenya in contravention of a Departure Prohibition Order, or fail to pay a transferred tax liability. The sanction is a fine of up to two million shillings, imprisonment for up to five years, or both.

Section 99: Offences Relating to Enforcement Powers targets non-compliance with KRA’s investigative authority. It is an offence to fail to provide information or produce documents when required, fail to appear before the Commissioner, or fail to answer questions put by an authorized officer. It is also an offence to fail, without reasonable excuse, to provide reasonable facilities and assistance during a search, such as providing access to decryption information.

Section 100: Obstruction of Authorised Officer states that a person commits an offence if they hinder or obstruct the Commissioner or an authorized officer in the performance of their duties under a tax law.

Section 101: Aiding or Abetting an Offence extends liability by establishing that a person who aids, abets, assists, incites, or induces another to commit a tax offence is themselves liable for the same sanction as the principal offender.

Section 102: Offences by Officers and Staff of the Authority holds KRA personnel to account. An authorized officer commits an offence if they make a false entry they know to be false, willfully refuse a required duty, interfere to defeat the law, fail in their duty without reasonable cause, willfully contravene the law to give undue advantage, or fail to prevent/report an offence. Subsection (2) separately makes it an offence to contravene confidentiality rules under Section 6. The sanction is a fine of up to two million shillings, imprisonment for up to five years, or both.

Section 103: Offences by Employees, Agents, and Companies establishes vicarious liability. If an employee or agent commits an offence, the employer or principal is also deemed to have committed it, unless they prove it was without their consent/knowledge and they exercised reasonable diligence. If a company commits an offence, the responsible officers (CEO, MD, directors, company secretary, etc.) at the time are also deemed guilty, subject to the same defense.

Section 103A: Unauthorized Access or Improper Use of Computerized Tax System creates modern cyber offences. It is an offence to knowingly and without authority access or attempt to access the system, to use or disclose information from the system for an unauthorized purpose, or to receive and disseminate such information without authority. Individuals face fines up to KES 400,000 or imprisonment up to two years; body corporates face fines up to KES 1 million.

Section 103B: Interference with Computerized Tax System further protects KRA’s digital infrastructure. It is an offence to knowingly falsify any record or information stored in the system, damage or impair the system, or damage any medium storing system information. The sanction is imprisonment for up to three years, a fine up to KES 800,000, or both.

Section 97A: Impersonating an Authorized Officer, introduced by amendment, specifically makes it an offence for a person who is not an authorized officer to assume the name or designation of one and perform an act they are not entitled to do. Conviction can lead to imprisonment for a term not exceeding three years.

Disclaimer: This article provides general information only and does not constitute legal or tax advice. Tax laws are complex and subject to change. Always consult qualified professionals for advice specific to your situation.

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CPA David Ndiritu Mwangi

Tax Disputes Resolution, Transfer Pricing, Tax Agent, Tax Advisory, Tax Consultant, Certified Public Accountant, Business Advisor.