CPA David Ndiritu Mwangi

Tax Researcher, Accounts & Tax Trainer,Auditor, Tax Agent,Tax Advisor,Business Advisor

[CPA David Ndiritu Mwangi @ndiritu25855]

https://t.co/mrL8Ei16Om

[CPA David Ndiritu Mwangi @ndiritu25855]

If you run a small business, micro-enterprise, or rent out property, KRA’s latest announcement is for you.
Following a revenue shortfall in Q1 2026 (missing VAT targets by Ksh 2.6B and PAYE by Ksh 7.3B), the taxman is turning to data matching to close the gap.
📷 Pochi la Biashara & Till Numbers: KRA will use your financial data to identify undeclared income among Micro & Small Taxpayers.
📷 Targeting High-Value Employers: PAYE data will be matched with third-party data to catch non-remitters. (KRA is already following up on Ksh 5.3B from Payment Returns without Payments and non-remitters).
📷 Landlords: The eRITS engine is coming for 1 million identified property owners to enforce Rental Income Tax.
📷 VAT: Prioritizing high-transmission taxpayers and eTIMS/return variance cases (Targeting Ksh 56.1B potential).

[CPA David Ndiritu Mwangi @ndiritu25855]

You know that moment.
You buy something. You ask for an eTIMS invoice. The trader looks at you and says:

“Top up for VAT first—16% extra.”

You refuse. You pay cash through the till or paybill anyway. The trader accepts. No eTIMS invoice. Everyone moves on.
It feels like a small shortcut. A way to keep the price low. A way to stay competitive.
But here’s the uncomfortable truth: it doesn’t remove the trail. It creates a bigger problem later.
Let’s break it down plainly.

📷The “top-up” demand is the problem
Many traders quote a VAT-exclusive price to stay competitive. Fine. But a VAT-registered trader cannot make VAT conditional on whether the buyer asks for an eTIMS invoice. The 16% is not a “top-up”—it’s VAT that should be accounted for on taxable sales. Charging it only when someone insists on an invoice is basically two prices: one for no-invoice buyers, one for compliant buyers. That is not a smart shortcut. It’s a red flag.

📷 The money still leaves a footprint
If you pay through a till or paybill, there’s a credit. KRA audits often run a banking test—they compare bank/till/paybill credits with declared sales. If the credits are higher, KRA can assess the difference and demand VAT, penalties and interest.

📷 Every bank credit must be taxed or explained with evidence
This is the part many traders ignore. “I didn’t issue eTIMS” is not an explanation. It’s an admission.
Every banking credit should either be:
-a taxable sale that has been declared and VAT accounted for; or
-an exempt or zero-rated sale supported by actual sales invoices; or
-a non-sale credit explained with documentary evidence.

What kind of evidence? Things like:
-Loan disbursements—loan agreements and bank statements.
- Capital injections or shareholder contributions—agreements, resolutions, bank records.
- Sale of assets—sale agreements and supporting documents.
- Refunds or reversals—credit notes, bank reversal slips.
- Transfers between the trader’s own accounts—statements showing both sides.
- Exempt sales—actual sales invoices.
- Zero-rated sales—actual sales invoices and supporting documents.
If you can’t explain a credit, KRA can treat it as undeclared sales and assess VAT, penalties and interest. The burden is on the trader.

📷 Exempt and zero-rated sales must still be declared on VAT3
This is the biggest myth. You should declare exempt sales and zero-rated sales on VAT3 in their respective boxes—they’re just not taxed the same way. Don’t fall for “we don’t declare those.”
So what should a trader do?
- Issue eTIMS invoices for every sale.
- If you quote VAT-exclusive, say “+ VAT” clearly and apply VAT consistently.
- Declare all sales—taxable, exempt and zero-rated.
- Reconcile your bank/till/paybill credits every month.
- Keep evidence for every credit that is not a sale—loans, capital, asset sales, refunds, transfers, exempt/zero-rated invoices.

Stop the “top-up for VAT” game. It doesn’t remove the trail—it creates a bigger problem
#taxlaw#VAT#TaxFraud

[CPA David Ndiritu Mwangi @ndiritu25855]

https://t.co/kZST1mCagc

[CPA David Ndiritu Mwangi @ndiritu25855]

Two weeks ago, KRA announced a major crackdown on a type of VAT fraud known as "missing supplier" schemes. The numbers were huge: 72 related companies, over 62,000 fake invoices created between 2020 and 2025, invoices worth about Sh33.83 billion, VAT of about Sh5.37 billion, and fraudulent VAT refund claims of about Sh3.996 billion. The Director of Public Prosecutions approved charges against 42 people, companies and company directors. On 15 October 2026, the first two traders were charged in a Nairobi court under Section 97 of the Tax Procedures Act, and a third suspect was accused of helping them. These are still allegations, and the courts will decide. Everyone is presumed innocent until proven guilty.

This crackdown is part of a wider trend. Taxpayers are reporting an increase in KRA summonses that specifically allege tax fraud, rather than ordinary civil audits. That shift matters, because a fraud summons is not just a routine request for documents. It signals that KRA may be looking at the criminal side of the file, not only the civil side. And these summonses are not only about missing supplier schemes. They cover other fraud allegations too, such as false statements, under-declaration of income, fake refund claims, and deliberate default on tax obligations.

So what is a missing supplier scheme? On paper, it looks like a normal VAT claim. The invoice looks real. The supplier may even have a tax PIN. There may even be an electronic tax invoice. But the supplier does not exist, or was deregistered, or never actually supplied the goods or services, or never paid the VAT over to KRA. That is why KRA treats this as more than a paperwork problem. The allegation is that the taxpayer knew the supplier was missing or fake, and claimed the VAT anyway.

This is where the civil and criminal sides separate. Section 97 is not about making an honest mistake on a tax return. It is about fraud. The prosecution must prove the taxpayer acted knowingly. Not by mistake. Not by negligence. Not because they failed to do proper checks. In a criminal case, that means proving knowledge beyond reasonable doubt. KRA must bring evidence that the taxpayer knew, for example a fake supplier, no payment trail, no stock or delivery records, money moving in circles, repeated use of the same missing supplier, or documents showing the taxpayer knew the truth. An under-declaration on its own is not fraud.

If convicted, the punishment can be severe. A person can face a fine of up to Sh10 million or double the tax evaded, whichever is higher, up to 10 years in prison, or both. That is why these cases are taken seriously.
And the civil side does not go away. KRA can still disallow the VAT and recover the tax while the criminal case runs. The law allows both cases to proceed at the same time, and the tax remains payable even if there is a prosecution. The civil case asks whether the tax is due. The criminal case asks whether the taxpayer knew. Those are two different questions, with two different burdens of proof.

The practical lesson is simple. When a KRA summons mentions fraud, whether it is about missing suppliers or any other fraud allegation, treat it as more than a normal audit. Keep your documents safe. Check your records and supplier chain carefully. Get advice early. The civil case recovers tax. The criminal case punishes conduct, with fines and even prison time. They are not the same game.
#TaxLaw #KRA #TaxProceduresAct #TaxFraud #KenyaTax #VAT #DisputeResolution
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[CPA David Ndiritu Mwangi @ndiritu25855]

Today, a whole building just came downin Easleigh. 18 floors. One minute it’s there, the next it’s dust and twisted metal. And then the worst part—people running toward the rubble, not away. Digging with bare hands. Police firing tear gas just to clear the road. Somewhere in that mess is someone’s dad. Someone’s sister.
Someone who left home this morning just trying to make a living.

And we all know the question: who approved this building? We don’t know yet who signed off on this one—but we’ve seen this movie before.

A few months ago, the guy in charge of building approvals in Nairobi, Patrick Analo, was arrested with KSh 65.3 million in suspected bribe money. He hasn’t been convicted. But what does that tell you about the gate?

And it’s not the first time. January, South C. Building approved for 12 floors, reportedly built to 16. It collapsed. 37 county officials charged. Same story, different address. Paperwork bent. Inspections bought. Stop-work orders ignored.

You can bribe an inspector. You cannot bribe gravity. Today gravity collected again—and the bill was paid in human lives.

If you live in areas where apartments are coming up like mushrooms, this should scare you. We don’t need more condolences. We need audits. Arrests. Accountability. And we need it before the next building comes down.

[CPA David Ndiritu Mwangi @ndiritu25855]

I am reliably informed that the manual CSVs for non-eTIMS expenses are now active. You can go ahead and file your pending income tax returns.

[CPA David Ndiritu Mwangi @ndiritu25855]

KRA is about to file your return before you do

Something is changing in Kenya's tax system, and most people have not felt it yet.

From 2027, the return you file for 2026 will not start with you. It will start with KRA.

The taxman will sit down and draft your return using everything already sitting in its databases. Your eTIMS invoices. Your payroll records. Your withholding tax. Your import entries. Whatever else it can pull together.

That draft will be ready and waiting for you by the end of January 2027.

Then the countdown begins. Sixty days. February and March. And in those sixty days, you have exactly two moves available to you.
-Move one: you read the draft, you decide it is right, and you leave it untouched.
-Move two: you read the draft, you decide it is wrong, and you replace it with your own figures — supported by your own paperwork.

There is no third move.

And this is the part people will learn the hard way. If you neither accept nor reject — if the sixty days simply pass while you are busy — the law does not treat that as indecision. It treats it as agreement.

The draft becomes your return. The draft becomes your bill.

Here is why that is dangerous. KRA's draft is built from system data. It cannot see the things that live in your books but not in its servers. It cannot see your wear and tear. Your capital allowances. Your provision for doubtful debts .Your prepayments & acruals . Your stock adjustments. The costs you incurred where the supplier never raised an eTIMS invoice.

So a return drafted without your input will quietly strip those out. Not out of malice — simply because nobody told KRA they existed.

Stay silent until 31st March, and you may have just filed a return that taxes you on profit you never made.

Once the sixty days close, whatever stands — the draft you accepted, or the version you corrected — becomes the return you file. Individuals file by 30th April 2027. Companies, partnerships, and trusts file by 30th June 2027, or the last day of the sixth month after their accounting year closes.

And do not make the mistake of assuming KRA's draft is accurate. The law deliberately hands you the right to push back. A pre-filled return is an opening offer, not a final word.

So what should you actually do, right now, in 2026?
Treat your record-keeping this year as your defence strategy. If your books are clean and current by December 2026, February and March become a simple review. If they are messy, those same two months become a race you cannot win.
Chase every supplier for eTIMS invoices today, not next year. Every missing invoice is an expense KRA will silently remove.

Put four dates where you can see them: end of January, end of March, end of April, end of June. These are no longer dates you can drift past.

And hold onto this one thought, because it sums up the whole reform:
Yesterday, the return was yours to write. Tomorrow, it is KRA's to write — and yours only to correct.

The window for last-minute filing has closed. The window for permanent readiness has opened.
Go and look at your 2026 records. Properly.
#TaxKenya #KRATax #FinanceAct2026 #TaxCompliance #ETIMS

[CPA David Ndiritu Mwangi @ndiritu25855]

KRA demanded Kshs. 231,602,607 from Paul Macharia.

He appealed. He lost.

Not because he was lying. Because his evidence didn't match his story.

Here's what the Tax Appeals Tribunal said

Macharia built commercial greenhouses across Kenya.

His money came in lumps tied to project milestones. Cash moved constantly between accounts.

KRA ran a fund test and found more money moving than his returns declared.

Assessment: Kshs. 124M income tax, Kshs. 45M VAT, plus penalties and interest.

He objected. KRA asked for documents: ledgers, invoices, contracts, payroll, reconciliations.

They met. He got a deadline. Missed it. Reminded twice. He sent audited accounts only.

KRA rejected the objection in full.

At the Tribunal, Macharia asked it to trust his audited accounts.

The Tribunal looked and found:

• 2020–2022 accounts named a different proprietor (Elizabeth Wanjiku Ngera)
• Auditor reports unsigned every year
• 2023 report dated 15 June 2023 — before the year ended
• 2022 accounts contradicted the 2022 comparatives in 2023 by over Kshs. 83M
5/7
He also dumped several hundred pages of bank statements at appeal.
No index. No reconciliation. No analysis showing which deposits weren't income.

Tribunal: "It is not our job to do the reconciliation you refused to do."

Bulk ≠ evidence.

Burden of proof is on the taxpayer under Section 56(1) TPA and Section 30 TAT Act.

He didn't discharge it.

Appeal dismissed. Objection Decision upheld. Each party bears own costs.

The lesson:

In tax, truth is not enough. Evidence is.

A story needs an audit trail.
Categories need credits matched to dates and figures.
Hundreds of pages need a reconciliation.

The Tribunal didn't say his business was fake. It said his proof was.

#TaxKE #KRA #TaxAppeals #KenyaTax

[CPA David Ndiritu Mwangi @ndiritu25855]

@WashiraX He is rich. He can pay.

[CPA David Ndiritu Mwangi @ndiritu25855]

There was a time when a landlord could own multiple rental properties, declare nil income, and no one would connect the dots.

The land registry had a file. The utility company had a file. KRA had a file. Nobody was matching them

That time is over.

In Mbari v Commissioner of Domestic Taxes (Tax Appeal 1282 of 2022), KRA investigated a real estate investor with residential and commercial rental properties in Nairobi. KRA stated it found Mbari "owned several properties as per KPLC data for which rental income was not properly declared for tax purposes". Based on that data, KRA issued assessments totaling over Kshs 31 million for the period 2014 to 2019. The properties were in Umoja, Huruma, Ngei, and Athi River.The trigger was not a whistleblower. It was the electricity meter.

In another case, Commissioner of Domestic Taxes v Gitere, KRA assessed a landlord because he had 34 KPLC meters, which the taxman treated as evidence of 34 rental houses. KRA has also publicly stated that access to KPLC's metering database is a major source of information for netting landlords into the tax net.

The logic is simple. A meter is a proxy for a tenant. A tenant is a proxy for rent. Rent is taxable income. When KRA sees multiple meters registered under your name or KRA PIN, it does not need to visit the property. The meter is the signal.

Now, in 2026, the net is wider and the rules are stricter.

The Finance Act 2026, enacted on 24 June 2025, has introduced a self-declaration regime for non-resident rental income, taxed at 30% on gross rental income from immovable property in Kenya, effective 1 July 2026. Non-resident landlords must now register, file monthly returns, and pay the final tax by the 20th of the following month. Foreign landlords with Kenyan property now have direct tax filing obligations in Kenya.

For resident landlords, the Monthly Rental Income (MRI) tax remains at 7.5% of gross receipts for residential income between Kshs 288,000 and Kshs 15 million annually, with no expense deductions permitted. But the voluntary era is ending.

The draft Income Tax (Residential Rental Income Tax) Regulations, 2026 propose making registration on the Electronic Rental Income Tax System (eRITS) mandatory for all landlords within the MRI band.

KRA cross-references Kenya Power meter registrations, Water utility bills , Ardhisasa land records etc.

The practical steps for 2026 are clear. Register every rental property on eRITS. Reconcile your income against your declared rental units. File your monthly MRI returns by the 20th.

The KPLC meter knows you have a tenant. KRA has the data. And in 2026, the regulations, the platforms, and the enforcement capacity have all caught up.

The only question is whether your return tells the same story.

#Tax #KRA #RentalIncomeTax #MRI #Compliance #Kenya #Landlords #DataMatching #KPLC #eRITS

[CPA David Ndiritu Mwangi @ndiritu25855]

@WashiraX @KRACare Ahadi ni deni, Please honour the debt

[CPA David Ndiritu Mwangi @ndiritu25855]

Rwanda has launched an innovative customer reward scheme meant to assist the tax authorities in enforcing VAT compliance.

It’s called Tengamara na TVA — and the idea is simple: reward shoppers for demanding proper electronic receipts.

How it works in Rwanda:
-You buy goods or services for personal use and request an EBM invoice.
-You give the seller your registered phone number so the receipt links to your account.
-You earn 10% of the VAT amount shown on the eligible invoice as cashback.
-If a trader refuses to issue an EBM receipt, you report them on WhatsApp: [phone].
-If the trader is penalized, you can earn an extra 50% of the penalty collected.
-Rewards are calculated quarterly and paid within 15 days after the quarter ends.

Now think about Kenya.

We already have eTIMS for electronic tax invoices. But imagine if KRA added a consumer cashback or reward for every valid eTIMS receipt you request.

Would that reduce tax leakage?

Would you demand receipts more often?

Or would it just add another layer of bureaucracy?

@KRACare @KRACorporate @WashiraX

#Kenya #KRA #eTIMS #TaxCompliance #VAT #Rwanda #TengamaraNaTVA #TaxReform

[CPA David Ndiritu Mwangi @ndiritu25855]

@KRACare @KSGKenya @HudumaKenya Please Work on manual CSVs for income tax returns and e-tims online frequent dowtime.

[CPA David Ndiritu Mwangi @ndiritu25855]

Naivas was looking for workers

Naivas is the biggest supermarket chain in Kenya. Everyone knows Naivas. But Naivas does not want to hire cleaners, packers, and store staff directly. That is not its business. So it brings in another company to do it.

That company is called Achievo Limited.

Achievo hires the workers. Achievo sends them to Naivas stores. Achievo handles their salaries, their PAYE, their NSSF. Naivas pays Achievo for two things: the cost of the staff, and a service fee for managing them.

Achievo charges VAT on the service fee. It does not charge VAT on the staff costs.

It says: The salary money is not our money. It comes from Naivas, and it goes to the workers. We are just the pipe.

KRA does not agree.

In 2024, KRA finishes an audit of Achievo for the years 2019 to 2023.

On 26th February 2024, KRA issues a Notice of Additional Assessment.

The bill is huge. Kshs 102,133,234 for Income Tax. And Kshs 777,092,137 for VAT.

The VAT bill is the shock. KRA says VAT should have been charged on the whole amount Naivas paid — including the salaries.

Achievo says: "No, we don't owe that." They object on 25th March 2024.

They argue: We were acting as Naivas's agent. The staff costs were passed through without any mark-up. We only earned the service fee. Under section 13(5) of the VAT Act, money paid to a third party as an agent is not taxable.

KRA is not impressed.

On 23rd May 2024, KRA issues an Objection Decision. It allows the objection only in part. It confirms Kshs 962,721,506 as due.

Achievo does not sit around having meetings. They go to the Tax Appeals Tribunal.

On 28th June 2024, they file TAT Appeal No. E717 of 2024.

While the case is going on, the parties talk. On 29th November 2024, they record a partial consent. The disputed amount comes down to Kshs 777,092,137.

At the Tribunal, Achievo produces the documents KRA asked for. Seven of them. Invoices to Naivas. The master payroll. NSSF remittance copies. Employee contracts. The Service Level Agreement. A list of employees below the PAYE threshold. And proof of payments to those employees.

Then they wait.

On 2nd May 2025, the Tribunal delivers its judgment.

Achievo loses.

The Tribunal agrees that the agreement describes Achievo as an agent. It agrees the reimbursement was without mark-up. But it says Achievo did not prove that the money received from Naivas was passed on in full to the workers. So the Tribunal upholds KRA's decision.

Achievo is not done.

On 8th July 2025, they appeal to the High Court. Memorandum of Appeal. Seven grounds.

The case comes before Justice Moses Ado.

The Appellant's submissions are dated 18th June 2026. The Respondent's submissions are dated 17th July 2026.

Justice Ado reads everything. The assessment. The objection. The objection decision. The Tribunal judgment.

And he asks a simple question: What was this fight actually about?

It was not about whether money moved. KRA never said Achievo kept part of the salaries. KRA never said the workers were not paid. KRA never challenged the arithmetic.

The fight was about the law. Were the staff costs "disbursements" under section 13(5) of the VAT Act?

He looks at the Service Level Agreement and the Addendum dated 1st September 2017.

The Addendum says Achievo is Naivas's agent for filing taxes, PAYE, and other disbursements payable by Naivas by law.

The Direct Costs — salaries, NSSF, and the rest — are paid without any mark-up. The Reimbursement Amount "shall not include any income taxes or any taxes, however designated."

Achievo earns a separate management fee. That is where its income comes from. That is where VAT is charged.

The judge also notes something else. KRA had asked for seven documents. Bank statements were not one of them. Only later, in submissions before the Tribunal, did KRA argue that bank statements were essential.

He says the Tribunal was wrong to make that the main reason to dismiss the case.

Then he goes to the substance.

KRA argued: Achievo is the legal employer. The workers have contracts with Achievo. So the salaries are Achievo's own costs. A company cannot be an agent paying its own salary bill.

Justice Ado rejects this. He says KRA is using a labour law idea to answer a VAT question.

The real question is not "who is the employer?" The real question is: whose economic burden is the salary cost, and who gets value from it being paid?

On the evidence, Naivas carried the burden. Achievo only administered the payments. The staff costs were not payment for Achievo's own supply. They were money received for a specific purpose and paid out to a third party.

He relies on the reasoning in Commissioner of Domestic Taxes v Lead Human Capital Limited, decided the same day, 22nd September 2026.

The judge notes there are other cases that went the other way. Commissioner of Domestic Taxes v Stratostaff E.A. Limited and Commissioner of Domestic Taxes v Techsavana Company Limited. He says they are different on their facts and contracts. They are persuasive, not binding.

He also notes the Finance Act, 2026, which added sections 13(5A) and 13(5B) to the VAT Act. Those sections say employee costs in labour outsourcing are not taxable. They do not apply to the old years, but the judge says they support the same view.

On 22nd September 2026, the High Court allows the appeal.

The Tribunal's judgment of 2nd May 2025 is set aside.

KRA's Objection Decision of 23rd May 2024, which charged VAT on the staff costs, is cancelled.

Each party pays its own costs.
#Tax

[CPA David Ndiritu Mwangi @ndiritu25855]

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[CPA David Ndiritu Mwangi @ndiritu25855]

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