Oki Trading in Sh827million tax battle with KRA over alleged hidden income
The Kenya Revenue Authority (KRA) is seeking to have the Tax Appeals Tribunal uphold a Sh827.4 million tax demand against Oki General Trading Company, following the collapse of negotiations between the tax agency and the firm.
The disputed tax bill comprises Pay As You Earn (PAYE) tax of Sh258.2 million, corporation tax of Sh438.4 million, value-added tax (VAT) of Sh130.6 million, and withholding tax amounting to Sh44,877.
Oki General Trading, which is domiciled in Dubai but operates in Kenya, has challenged the assessment at the Tribunal, arguing that KRA wrongly classified certain transactions as taxable income and blaming alleged financial misconduct on its former director, Honey Khatwani.
However, KRA has urged the Tribunal to dismiss the appeal and confirm the tax assessment, saying its audit of the company’s operations between 2020 and 2024 revealed significant compliance gaps and unexplained financial transactions.
The tax authority told the Tribunal that analysis of Ecobank and Absa bank records showed withdrawals by staff and directors, including Khatwani, Anil Kumar Ramchandani, Jatin Aswani and Jayesh Soni, amounting to about Sh604 million during the audit period.
KRA argued that several of these withdrawals, along with payments for rent and household goods made on behalf of employees, constituted taxable benefits subject to PAYE, as the individuals were resident in Kenya during the period in question.
The authority further told the Tribunal that Oki failed to provide key documents including payroll records, employment contracts, stock reconciliations, transfer pricing documents, and an asset register, making it difficult to verify the company’s financial position.
It said discrepancies between customs data and the company’s declared imports suggested that stock worth hundreds of millions of shillings had not been properly accounted for in financial statements. As a result, KRA applied a 20 per cent margin on stock values and a 25 per cent industry mark-up, which it said revealed undeclared profits of Sh148.4 million.
“The variances indicate that the Oki company received stock items more than those that are accounted for as purchases in the financial statements,” KRA told the Tribunal.
The tax agency also alleged that some customs duties had not been paid on imports, despite being recorded as purchases, and said it relied on customs data to reconstruct the company’s taxable income.
KRA added that its repeated requests for supporting documentation were not met during the objection stage, leading to the confirmation of the tax assessment in a decision issued on July 17, 2025.
Oki General Trading has disputed the findings, arguing that the disputed withdrawals were either petty cash disbursements or funds allegedly misappropriated by its former director. The company maintains that these should not be treated as taxable income.
It has also invoked a double taxation treaty, arguing that salaries and wages should be taxed in the jurisdiction where income is earned unless otherwise specified under international agreements.
The company further contests KRA’s treatment of imports worth Sh349.3 million, insisting that customs duties were not properly assessed and that some transactions were wrongly disallowed.
The dispute is linked to broader legal battles involving former director Khatwani and associates, including ongoing civil and criminal proceedings over alleged misappropriation of company funds.
A High Court ruling previously ordered Khatwani, his wife Jayesh Soni, and others to repay more than Sh362 million jointly and severally, while additional consent agreements have also required partial repayments linked to disputed assets and goods.
The company has also been involved in litigation over warehouse goods in Nairobi, with court applications seeking to restrain auctioneers from disposing of seized property, arguing that some enforcement actions were carried out without proper service or due process.
