KRA Busts KSh 4 Billion VAT Fraud ‘Missing Trader Scheme’ as KSh 33.8
Billion in Fake Invoices Uncovered

The Kenya Revenue Authority (KRA), through its Investigations and Enforcement
Department, has uncovered a sophisticated tax fraud scheme also commonly known as
‘Missing Trader Scheme’, involving fictitious electronic invoices used to facilitate
fraudulent input Value Added Tax (VAT) claims. KRA has submitted thirty-seven (37)
inquiry files to the Office of the Director of Public Prosecutions (ODPP) for review and
appropriate action.
KRA’s investigations established that 72 related entities were used to perpetrate the
scheme between 2020 and 2025. The entities transmitted 62,869 electronic invoices
through the electronic Tax Invoice Management System (eTIMS), valued at
approximately KSh 33.83 billion, with corresponding VAT of KSh 5.37 billion. Further
investigations revealed that taxpayers purporting to have purchased goods and services
from the identified entities subsequently declared purchases worth approximately KSh
25.07 billion, resulting in input VAT claims amounting to approximately KSh 3.996
billion.
Investigations established significant indicators that the entities generating the invoices
did not undertake genuine business activities. Several were nil or non-filers for VAT, did
not file income tax returns, had no PAYE obligations and, despite the scale of
transactions attributed to them, could not be physically located at their registered
business premises. Evidence further indicated that some entities appeared to exist
primarily to generate invoices without corresponding underlying transactions.
KRA’s digital forensic analysis identified linkages between taxpayer entities, electronic
devices, telephone numbers and individuals associated with the generation and
transmission of the invoices. The investigation also identified instances of internal
facilitation involving KRA staff profiles, which are being subjected to appropriate
internal and legal processes.
Following completion of investigations, KRA forwarded 57 inquiry files to the Director
of Public Prosecutions, who approved the prosecution of 42 individuals, companies and
company directors. Six suspects have already been apprehended and are expected to face
charges including fraud in relation to tax and aiding another person to commit an
offence under a tax law, among other offences.