The Kenya Revenue Authority (KRA) defied tough economic conditions facing businesses and households to grow tax collections by 3.6 percent to Sh1.91 trillion in the 10 months to April 2024.
The tax revenue collected on behalf of the national government was equivalent to 95 percent of the target of Sh2.006 trillion for the 10-month period, reflecting the effects of the economic headwinds that slowed down private sector activity, imports and exports.
The taxman netted a further Sh205.52 billion in agency fees (revenue collected on behalf of other government agencies), bringing the total revenue collected in the period to Sh2.11 trillion.
In contrast to taxes, the agency collections were 11.8 percent above the prorated target of Sh183.8 billion for the period.
“In spite of the progressive growth, the collection was affected by various economic indicators that directly drive revenue collection. The various indicators that influence revenue performance have generally moved contrary to expectations, affecting revenue mobilisation,” said the KRA in a release on Thursday.
“The Purchasing Managers Index (PMI) averaged at 49.8 between July 2024 and April 2025, indicating a slowdown in private sector activities. This subdued demand was further evidenced by a 1.6 percent drop in import values, an important indicator of domestic demand for both raw materials and consumer goods.”
A PMI reading above 50.0 indicates growth in business activity, while below the mark signals contraction.
KRA’s goal is to collect Sh2.67 trillion in total revenue by the end of the current financial year ending on June 30, meaning that it has collected 79 percent of its target and will need to raise an additional Sh556 billion in the last two months of the year.
Domestic taxes, which include excise duty, income tax and VAT, increased by 4.7 percent to Sh1.39 trillion compared to the same period a year earlier, while customs revenue grew 9.1 percent to Sh722.74 billion despite a drop in import values.
The collections came amid challenges in the country’s domestic business sector where credit to the private sector grew marginally by 0.2 percent in March 2025, following a contraction of 1.3 percent in February.
The ratio of gross non-performing loans (NPLs) to gross loans also widened to 17.2 percent in February 2025 from 16.4 percent in December 2024, with real estate, personal and household, trade, building and construction and manufacturing sectors the worst hit.
There was also a 3.6 percent fall in key exports earnings, driven by a decline in key sectors such as tea (–18.6 percent) and horticulture (–6.2 percent) in the period.
In order to address the collection challenges, the KRA rolled out a number of policy measures to encourage compliance, including the implementation of a Centralised Release Office to improve cargo clearance and hence customs revenue performance.
The KRA also introduced the Electronic Rental Income Tax System
The system, which requires businesses to file receipts or invoices with KRA as proof of expenses, is aimed at widening the tax base as big companies report to the authority the small firms that act as their suppliers.
It also helps to curb the practice of large firms inflating their sales and reducing their profits in order to pay lower taxes.
The Treasury will not impose new taxes or increase existing ones in the budget proposals for the year starting July.
Instead, it will pursue tax cheats, broaden the tax base and make the wealthy pay their fair share of taxes in the push to raise an extra Sh177 billion.
