KRA wins as Chinese businessman Cai Ronggui is sentenced to 4 years in

A Chinese businessman has been convicted of tax fraud amounting to Sh74.6 million and sentenced to four years in jail. 

Cai Ronggui, the owner of Yiyuan Trading Company Limited, was found guilty of four counts of tax fraud after failing to declare both income tax and Value Added Tax (VAT) for the years 2018 and 2019.

Milimani Court Magistrate Hon. Bernard Ochoi ruled on the case, sentencing Ronggui to four years behind bars. 

He was also given the option to pay a fine of Sh6 million instead of serving the full jail term.

Failure to Declare Income and VAT

According to the court proceedings, Ronggui's company, Yiyuan Trading Company Limited, generated significant income over two years but deliberately failed to report it to the Kenya Revenue Authority (KRA).

The court heard that in 2018, the company earned Sh60.4 million but failed to declare it. 

This resulted in an income tax liability of Sh18.1 million. In 2019, the company made Sh101.7 million in earnings, leading to an unpaid income tax liability of Sh30.5 million. 

In addition to income tax, the businessman also failed to declare VAT for the two years. This resulted in further tax liabilities of Sh9.6 million for 2018 and Sh16.2 million for 2019.

Despite denying the charges, Ronggui had been out on bail since the case was filed in December 2021. The court, however, found him guilty of tax evasion.

Government Cracks Down on Tax Evasion

KRA, in a statement, emphasised that the ruling is a major step in cracking down on tax fraud and enforcing compliance.

"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.

Legal and Financial Repercussions

The court’s decision highlights the legal risks associated with failing to comply with tax laws in Kenya. 

Ronggui’s company, despite earning over Sh162 million in two years, failed to fulfil its tax obligations.

The sentencing serves as a warning to other business owners who may attempt to evade taxes. 

As Kenya continues to tighten its tax regulations, authorities have vowed to increase scrutiny on businesses and individuals suspected of tax evasion.