KRA collects Sh2.17 trillion, misses annual revenue target by Sh107 billion
Among the outperformers in the last financial year was collections from Excise Tax on betting which managed to collect Sh6.65 billion against a target of Sh5.72 billion.
What you need to know:
- KRA has attributed the missing of its tax revenue target by Sh107 billion to the harsh economic environment.
- Among the outperformers in the last financial year was collections from Excise Tax on betting which managed to collect Sh6.65 billion against the targeted Sh5.72 billion.
The Kenya Revenue Authority (KRA) collected Sh2.17 trillion in tax revenue in the financial year ended June 2023, translating to a 6.7 percent growth compared to the previous financial year. However, it missed its revenue target for the financial year 2022/23 by Sh107.0 billion.
This means that in the financial year ended June 2023, KRA reported a 95.3 per cent performance rate in tax collection and is the first financial year in two consecutive ones in which KRA has missed its target.
The taxman has attributed missing of its tax revenue target to the harsh economic environment.
“The revenue performance reflects the prevailing economic indicators, especially the projected GDP growth of 5.8 per cent in FY 2022/23 (Budget Policy Statement 2023) compared to a growth of 6.5 per cent in FY 2021/22”, said acting Commissioner-General, Rispah Simiyu, in a statement today.
High performers: Betting, digital taxes
Among the outperformers in the last financial year was collections from Excise Tax on betting which managed to collect Sh6.65 billion against a target of Sh5.72 billion, translating to a performance rate of 116.2 per cent with a surplus of Sh925 million.
This stellar performance has been attributed to the October 2022 integration of KRA systems with those of betting companies, allowing enhanced visibility of revenue generated by the firms as well as real time tax collection by KRA.
“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 said.
Impressive growth in collections was also reported in the recently introduced Digital Services Tax which posted 207.9 percent growth to mobilise Sh5.33 billion in the financial year ended June 2023.
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. KRA says that in the financial year 2022/23, a total of 940,483 new tax payers were onboarded into the system.
“The Tax Base Expansion Program 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.
Domestic Value Added Tax grew by 12.7 per cent to collect Sh272.45 billion. KRA reports that the transition to the Electronic Tax Invoice Management System in February 2023 was instrumental in driving this performance.
“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 7 months of FY 2022/23”, Simiyu says.
Slow performers: PAYE, Corporate income
Collections from Pay As You Earn (PAYE) stood at Sh494.98 billion in the financial year ended June 2023, 7.76 per cent growth from the collections of the previous financial year. Corporate Income Tax registered Sh263.82 billion in collection posting 9.89 per cent growth. Collections from customs also posted single digit growth at 3.63 per cent to register Sh754.0 billion.
KRA now targets collecting Sh2.768 trillion in the current financial year and breaching the Sh3.0 trillion mark by 2024/25.
