Two arrested over creating ghost business companies to evade taxes

On 1 September 2021 at 06:36

Rwanda National Police (RNP) has arrested two people in City of Kigali for allegedly creating fictitious business companies with intention to evade taxes.

Patrick Nsengumukiza, 42, and Benoit Karangwa, 46, arrested on Monday in Nyarugenge Sector, Nyarugenge District were paraded to the media on Tuesday, August 31, at Kigali Metropolitan Police Headquarters in Remera, Gasabo District. Through the created ghost business companies, the duo allegedly evaded taxes worth over Rwf40 million.

Nsengumukiza said that he met Karangwa in March this year and that they have since created three ghost companies dealing in construction materials.

“I was helping people to register or open businesses online, but sometimes using fake Electronic Billing Machine (EBM) to register fictitious companies. I helped this man (Karangwa) to open three fake companies. We did it well knowing that it was illegal because they were not registered anywhere as legal business companies,” said Nsengumukiza.

According to Nsengumukiza, Karangwa was only using the ghost companies to engage in other businesses without paying taxes since they are not registered and unknown. He added that Karangwa would use one company for only three months, close it and open another to avoid being detected or arrested.

According to Karangwa, he met Nsengumukiza as they were both businesspeople and that it is the latter that brought the whole idea.

“He first came as a client but later brought the idea of creating ghost companies and issuing fake receipts. In the last three quarters, were had evaded over Rwf40 million,” said Karangwa.

RNP spokesperson, Commissioner of Police (CP) John Bosco Kabera said that Nsengumukiza is suspected of facilitating traders to evade taxes.

“Nsengumukiza was facilitating traders to create fake business companies with intention to evade taxes but also helping other people with registered companies to evade taxes. He was basically being paid for facilitating traders to evade taxes.”

He added: “Businesses operate under specific laws, which must be respected including paying taxes where applicable. If you are not well versed with the laws and processes, Rwanda Revenue Authority (RRA) is there to help you.”

Anyone, who acts contrary to the law, CP Kabera warned, will be arrested to face the law. “Don’t fall prey to people, who want you to pay them to help you evade taxes. There are ways and means to detect such criminal practices for you to be prosecuted for breaking the law.”

Article 87 of Law N° 026/2019 of 18/09/2019 on tax procedures states that a person who, while intending tax evasion, use of forged documents in his or her accounts; counterfeit and use of documents or materials of the tax administration used for taxation; hide taxable goods or assets related to business; make a declaration indicating that the taxpayer has not made sales; change the trade name by a person prosecuted in relation to tax; make fraudulent registration of trade under the name of another person; hide accounting documents from the tax administration or damaging them; or use of forged accounting records; commits an offence of tax evasion.

Upon conviction, he or she is liable to imprisonment for a term of not less than two years and not more than five years.