Economy
KRA misses revenue target by Sh107bn
Friday July 14 2023
Times Tower in Nairobi, the headquarters of Kenya Revenue Authority (KRA). FILE PHOTO | DENNIS ONSONGO | NMG
Kenya Revenue Authority (KRA) missed its revenue collection target by Sh107 billion in the fiscal year ended June 2022, citing a harsh economic environment.
The taxman collected Sh2.166 trillion, a 95.3 percent performance rate, the first time in two consecutive financial years the agency missed the target. The target was 2.273 trillion.
Read: KRA misses tax targets by Sh27bn in Ruto presidency
The tax receipts, however, recorded a 6.6 percent growth compared to the 2021/2022 fiscal year, when revenue collection stood at Sh2.031 trillion.
“The revenue performance reflects the prevailing economic indicators, especially the projected GDP growth of 5.8 percent in FY 2022/23 (Budget Policy Statement 2023) compared to a growth of 6.5 percent in FY 2021/22”, the acting Commissioner General, Rispah Simiyu, says in a statement Thursday.
High performers
The taxman said collections from the excise tax on betting stood at Sh6.65 billion against a target of Sh5.72 billion, representing a 116.2 percent performance rate of 116.2 per cent or a surplus of Sh925 million.
“The performance is attributed to the integration of the betting companies into the KRA tax system. The integration has streamlined tax remittance from the sector and scaled up revenue collection,” Ms Simiyu says.
The agency linked its systems with those of betting companies in October last year, allowing enhanced visibility of revenue generated by the firms as well as real-time tax collection.
Read: Early winnings for KRA as betting taxes double
Digital services tax rose by 207.9 percent growth to Sh5.33 billion.
KRA has also reported strong tax base expansion as one of the reasons behind the performance of the financial year that ended in June 2022. The taxman says a total of 940,483 new taxpayers were onboarded into the bracket.
“The Tax Base Expansion Programme enabled KRA to collect Sh14.65 billion in revenue through initiatives such as recruitment of landlords under the Monthly Rental Income (MRI) obligation and the Block Management System (BMS) to map out potential taxpayers,” it says.
Domestic value added tax (VAT) grew by 12.7 percent to Sh272.45 billion. KRA says the transition to the Electronic Tax Invoice Management System (eTIMs) in February this year was instrumental in netting more revenues.
“It is important to note that VAT growth scaled up to 18.0 percent in February – June 2023 upon implementation of Tax Invoice Management System (TIMS & eTIMs), from an earlier slower growth of 6.7 percent in the first seven months of FY 2022/23,” Ms Simiyu said.
Slow growth performers
Collections from Pay As You Earn (PAYE) stood at Sh494.98 billion, a 7.76 percent increase, while corporate income tax registered Sh263.82 billion, representing a 9.89 percent growth compared to the previous financial year.
Collections from customs also posted single-digit growth at 3.63 percent to register Sh754 billion.
KRA now targets collecting Sh2.768 trillion in the current financial year and breaching the Sh3 trillion mark by 2024/25.
