KRA Collects Record High Ksh2.407 Trillion

President William Ruto filling his taxes at the KRA offices on May 26 2023
President William Ruto filing his taxes at the KRA offices on May 26 2023

The Kenya Revenue Authority (KRA) has achieved a remarkable milestone by collecting Ksh2.407 trillion in the financial year 2023/2024, reflecting an impressive growth of Ksh241 billion compared to the previous year.

This significant accomplishment marks an 11 per cent increase in revenue collection, continuing the upward trend shown in FY 2018/2019.

Despite facing numerous economic challenges, including the depreciation of the Kenya Shilling against the US Dollar, rising bank lending rates, and international conflicts disrupting supply chains, KRA has shown resilience and adaptability.

The revenue collected in the previous financial year stood at Ksh2.166 trillion, highlighting a performance rate of 95.5 per cent against the target.

KRA collected Ksh2.22 trillion in ordinary revenue, a 9.5 per cent increase from Ksh2.03 trillion in the fiscal year ending June 30, 2023. Although the initial target was set at Ksh2.76 trillion, it was later revised to Ksh2.49 trillion due to a supplementary budget by the National Treasury.

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Exchequer revenue saw a 9.5 per cent growth, with Ksh2.223 trillion collected compared to Ksh2.030 trillion in the previous year. This translates to a performance rate of 95.8 per cent. Additionally, KRA's efforts in collecting agency revenues amounted to Ksh184.036 billion, reflecting a 34.9 per cent increase from the last financial year.

Domestic Taxes registered a robust growth of 14.4 per cent, with Ksh1.611 trillion collected against a target of Ksh1.677 trillion, achieving a performance rate of 96.1 per cent. Customs Revenue, on the other hand, recorded a performance rate of 94.6 per cent, collecting Ksh791.368 billion, a 4.9 per cent growth compared to the same period in FY 2022/2023.

The overall increase in import values by 11.7 per cent did not fully translate to higher customs revenue due to exemptions and remissions, which grew by 23.8 per cent, primarily driven by special exemptions for food commodities. These exemptions were part of the government's strategies to mitigate drought effects and reduce living costs.

KRA Commissioner-General Humphrey Wattanga acknowledged the decline in income tax from sectors like finance, insurance, information, communication, and manufacturing, attributing it to higher provisioning for non-performing loans and forex losses from a depreciated exchange rate. The high retail prices affected demand for manufactured goods, impacting profitability.

A graphic highlighting some of the revenue collections in FY 2023/2024.

Pay-as-you-earn tax increased by 9.7 per cent to Ksh543.2 billion. Implementing the Electronic Tax Invoice Management System (eTIMS) significantly boosted VAT collection on domestic products, with KRA netting Ksh314.2 billion, thanks to minimised VAT fraud and increased taxpayer compliance.

Corporation Income Tax grew at a slower rate of 4.9 per cent to Ksh278.2 billion, compared to a 7.2 per cent growth in the previous financial year. KRA's aggressive tax base expansion efforts brought in an additional Ksh24.62 billion in revenue, with significant contributions from the Monthly Rental Income programme and integration with other systems for real-time tax collection.

The integration of Betting and Gaming Companies into the KRA system led to a 26.2 per cent growth, with Ksh24.269 billion collected, showcasing the impact of streamlined tax remittances. Additionally, KRA enhanced debt collection efforts, recovering Ksh103.390 billion from non-compliant taxpayers.

The Tax Amnesty programme brought in Ksh43.9 billion, while anti-corruption measures, including the anonymous whistle-blowing mechanism, led to the recovery of Ksh4.22 billion. Customer support programmes focused on creating a customer-centric tax environment, enhancing voluntary compliance and revenue collection.

KRA's future plans include deploying new technology to create market-customized solutions and leveraging data analytics, AI, machine learning, and API to modernise tax processes and improve compliance. The 9th Corporate Plan, spanning five years, aims to enhance tax and Customs compliance, expand the tax base, and optimise infrastructure and human resources.

The resilience of taxpayers, who filed a total of 8,046,029 tax returns by June 30, 2024, against a target of 7,187,932, reflects their commitment to supporting Kenya's economic transformation.

KRA remains dedicated to simplifying tax payment processes and maintaining integrity and professionalism in all interactions with taxpayers.

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