By The Weekly Vision Reporter
The Immigration Department of Kenya and the Kenya Revenue Authority (KRA) are being urged by a concerned Kenyan to promptly investigate alleged cases of tax evasion and work permit violations involving a firm known as KCIC Consulting. There are serious concerns regarding the legality of KCIC Consulting’s CEO, Prabhakar Vanam’s work permit status in Kenya. It is alleged that Mr Vanam has been working in the country without a valid work permit, which constitutes a direct breach of Kenyan immigration laws.
According to Section 34 of the Kenya Citizenship and Immigration Act, 2011, any non-citizen must obtain the appropriate visa or work permit to legally enter or stay in Kenya. By not acquiring a valid work permit, Mr. Vanam is accused of violating these regulations. Moreover, KCIC Consulting is also under scrutiny for potentially breaching the Immigration Act.
The Act stipulates that every employer must secure a work permit or special pass before hiring a foreign national. Non-compliance with this provision can lead to severe consequences, including fines of up to Ksh. 500,000, imprisonment for up to three years, or both.
In addition to the immigration concerns, the KRA is being asked to investigate allegations of tax evasion by KCIC Consulting. The current government is reportedly experiencing significant financial losses due to unremitted tax revenues. It is alleged that the top management at KCIC Consulting has been involved in tax evasion by failing to deduct and remit the correct amount of taxes for certain employees (referred to as consultants). Specifically, KCIC Consulting is accused of illegally withholding PAYE (Pay As You Earn) remittances, which gives these employees an unauthorized financial advantage.
The allegations suggest that KCIC Consulting, in collaboration with these employees, has engineered a scheme to avoid full PAYE deductions and payments to the KRA. Instead, they are reportedly remitting only 5% of the total tax due as withholding tax, rather than the full PAYE amount required.
Investigations indicate that among the consultants whose salaries are approximately Ksh. 500,000, KCIC Consulting has only been remitting Ksh. 25,000 (equivalent to 5% withholding tax) to the KRA each month. In contrast, the total PAYE that should be remitted to the KRA is 25% of the consultants’ net salaries.
KCIC Consulting claims that these individuals are consultants, but a thorough investigation has revealed that, based on Kenya Revenue’s definitions and employment guidelines, they are actually employees. This distinction is crucial because if these individuals were truly consultants employed by a registered consultancy firm, the firm would be responsible for paying the consultants and handling PAYE remittances to the KRA. However, in this case, KCIC Consulting is directly managing these payments and taxes.
The situation suggests that KCIC Consulting and the involved individuals might be engaged in illicit activities by allegedly diverting funds intended for KRA. It is imperative that KCIC Consulting and the individuals in question be held accountable for their actions under the law. Furthermore, the KRA should extend its investigation to include other businesses that have conducted transactions with KCIC Consulting to determine whether there have been additional instances of tax evasion associated with these contracts.
