The High Court in Nairobi has upheld a decision by the Kenya Revenue Authority (KRA) and the Director of Immigration to bar a Chinese investor from leaving Kenya due to unpaid tax arrears totaling Ksh83.5 million.
Justice Lawrence Mugambi ruled that Cai Jiupeng cannot travel to China to visit his parents until he clears Ksh83,561,358 in unpaid taxes owed by Huiye Kenya Trading Co. Limited and Yingluo International Trading Co. Limited.
The judge stated that Jiupeng’s role as a tax representative and his financial transactions—depositing and withdrawing money on behalf of the companies—prove that he acted in their interest.
“The respondents (KRA) acted within their mandate by implementing preventive measures to curb potential revenue losses through tax evasion, considering the petitioner (Jiupeng) represents a company with substantial tax arrears,” ruled Justice Mugambi.
Jiupeng Challenges KRA’s Decision
Jiupeng, who has lived in Kenya since 2019, had filed an appeal in the High Court seeking to lift the travel restriction imposed by KRA and the Director of Immigration.
He accused KRA of unlawfully restricting his movement, arguing that the agency’s actions violated his constitutional right to freedom of movement under Article 39 and caused him significant business losses.
Jiupeng denied being a director or controlling partner in Huiye Kenya Trading Co. Limited and Yingluo International Trading Co. Limited, insisting he was merely an employee with no authority over the companies’ financial affairs.
He dismissed the travel ban as an unfair shakedown by KRA and argued that the tax agency should pursue the actual company owners instead of penalizing him.
Dispute Over Power of Attorney
The Chinese investor also challenged the validity of a power of attorney linking him to the tax arrears. He claimed he signed the document under coercion and without understanding its legal implications.
Jiupeng further argued that the document was invalid since the donor had not signed it.
He maintained that he had no control over the companies’ financial affairs. However, KRA dismissed his claims, stating that Jiupeng filed nil tax returns despite clear evidence of sales transactions by the companies.
KRA Justifies Travel Ban
KRA accused Jiupeng of failing to register for VAT obligations, even though the companies engaged in vatable sales that met the threshold required under Section 5 of the Value Added Tax Act, 2013.
The tax agency justified its travel restriction, arguing that investigations established reasonable grounds to consider Jiupeng a flight risk. KRA contended that as a tax representative, Jiupeng could leave Kenya without settling the companies’ tax liabilities, violating Section 15 of the Tax Procedures Act, 2015.
KRA further revealed that tax investigations into Huiye Trading Company Limited were triggered by suspicious financial activities in its bank accounts.
Tax Investigations Uncover Suspicious Bank Transactions
According to KRA, investigations found that Cai Jiupeng and Guo Wendong were signatories to the Huiye Trading Company Limited bank account, which received deposits of Ksh67,373,900 and Ksh98,144,650, respectively.
The tax agency stated that a power of attorney, executed on April 1, 2019, and registered on April 5, 2019, granted Jiupeng full authority to manage all affairs of the company.
KRA also pointed out that Jiupeng never disputed the power of attorney when it was used to open bank accounts for the company. However, he only challenged its validity after tax investigations began.
Next Steps in the Case
With the High Court ruling in favor of KRA, Jiupeng remains barred from leaving Kenya until he settles the tax arrears.
Authorities continue to investigate the financial dealings of Huiye Kenya Trading Co. Limited and Yingluo International Trading Co. Limited to determine the full extent of their tax obligations.
This ruling reinforces KRA’s crackdown on tax evasion, signaling tougher measures against foreign and local companies failing to comply with tax laws.
