A Chinese businessman, Cai Ronggui, has been sentenced to four years in jail after being convicted of tax fraud amounting to Sh74.6 million. Ronggui, the proprietor of Yiyuan Trading Company Limited, was found guilty of failing to declare both income tax and Value Added Tax (VAT) for the years 2018 and 2019.
Milimani Court Magistrate Bernard Ochoi delivered the ruling, handing Ronggui a four-year jail term. The businessman was, however, granted the option of paying a Sh6 million fine to avoid serving the full prison sentence.
Court proceedings revealed that Yiyuan Trading Company Limited generated substantial income over two years but deliberately failed to declare it to the Kenya Revenue Authority (KRA).
In 2018, the company earned Sh60.4 million but did not report the income, resulting in an unpaid income tax liability of Sh18.1 million. The following year, the company made Sh101.7 million in revenue, accruing a further Sh30.5 million in unpaid income tax.
Additionally, Ronggui failed to declare VAT for both years, leading to additional liabilities of Sh9.6 million for 2018 and Sh16.2 million for 2019. Despite denying the charges, Ronggui was found guilty of tax evasion. He had been out on bail since the case was filed in December 2021.
The Kenya Revenue Authority lauded the court’s ruling as a significant step in the fight against tax evasion. In a statement, KRA highlighted the importance of the case in reinforcing the government’s commitment to enforcing tax laws.
“This case underscores the government’s commitment to enforcing tax compliance and holding individuals accountable for tax evasion. The sentencing is expected to set a strong precedent for similar offences,” the statement read.
The sentencing serves as a stark reminder of the legal risks businesses and individuals face for failing to comply with tax laws. Ronggui’s company, despite earning over Sh162 million across two years, failed to fulfil its tax obligations, leading to substantial financial and legal repercussions.
Kenyan authorities have vowed to tighten scrutiny on businesses and individuals suspected of evading taxes. With enhanced measures to ensure compliance, the government aims to deter tax fraud and protect the country’s revenue base.
