The Director of Public Prosecutions has approved charges against five individuals and 12 companies accused of running a scheme that allegedly cost the government about Sh3.9 billion in Value Added Tax through fake invoices.
In a statement dated Thursday, October 15, the Office of the Director of Public Prosecutions (ODPP) said the decision followed joint investigations with the Kenya Revenue Authority (KRA) and a review of 70 inquiry files.
How the alleged scheme worked
According to the ODPP, investigators found a network of so-called “missing traders” — companies used to generate fictitious transactions and electronic tax invoices. Other businesses then allegedly used those invoices to claim VAT refunds or cut their tax bills, even though no genuine purchases had been made.
The five people named are Henry Ateka Nyabwari, James Ojiambo Nyengenye, Amisi Zamda, Frank Nyabwari and Hesbon Onyoni. Prosecutors allege they were involved in registering 70 companies that were instrumental in carrying out the scheme.
The DPP approved prosecution in 36 cases involving transactions valued at about Sh3.22 billion, with an alleged VAT loss of about Sh518 million. Six of those cases, with a VAT implication of about Sh17 million, have been prioritised for immediate prosecution. Companies cited in the files include Renova Limited, Larigi Enterprises, Njemtar Agencies, Jeflar Construction Company, Namtek Transporters Company Limited, Jawari General Supplies and Tekaza Investment & General Supplies, TV47 and Nairobi Leo reported.
“The remaining files will be registered in court in due course, and the suspects involved therein will be charged accordingly,” the ODPP said.
Sh42bn in invoices over five years
The charges follow a Business Daily investigation published on Wednesday, which reported that fictitious electronic invoices worth about Sh42 billion were generated over five years through KRA’s electronic Tax Invoice Management System (eTIMS). The paper said 62,869 fake invoices were produced between 2020 and 2025 and that 72 companies used the scheme, claiming purchases worth Sh25.07 billion with corresponding VAT of Sh5.37 billion.
Investigators told the paper that the operators charged an average commission of 1.5 per cent on the value of each invoice, and that a digital forensic analysis linked the claiming firms to the phone numbers and devices of those generating the invoices. Some of the invoicing firms did not physically exist, the report said, and several were nil or non-filers for VAT.
KRA Commissioner for Investigations and Enforcement Mohamed Abdul M’maka warned businesses that buy or use such invoices. “Such companies are not merely beneficiaries of a tax arrangement but are also participants in tax fraud and therefore liable to criminal and civil sanctions as prescribed by the law,” he told Business Daily.
He said the authority was “deploying eTIMS intelligence, data analytics, digital forensics, financial investigations and inter-agency cooperation to identify artificial transactions, trace the beneficiaries and facilitators behind the VAT fraud and recover the money lost through such schemes.”
Revenue pressure
The case lands as KRA chases revenue targets. National Treasury data cited by Business Daily show the taxman posted a Sh58.2 billion shortfall in the first quarter of the 2026/27 financial year, even as ordinary revenue rose 14.4 per cent to Sh655.8 billion in the three months to September.
KRA has also piloted georeferencing on eTIMS, tying electronic invoices to geographic coordinates, and is working on stock tracking so that invoices match a trader’s goods levels. Businesses flagged under the system are effectively locked out of filing VAT returns on iTax, according to the paper.
The ODPP said it remains committed to “combating economic and financial crimes, including sophisticated tax fraud schemes, and to protecting public revenue.”
Sources: TV47 Digital | Kenyans.co.ke | Business Daily | Nairobi Leo
Photo: Arthur Buliva / Wikimedia Commons (CC BY-SA 3.0)
