Economy
KRA exceeded the revenue target by Sh107 billion
Friday, July 14, 2023
Times Tower in Nairobi, headquarters of the Kenya Revenue Authority (KRA). file image | Denis Onsongo | NMG
The Kenya Revenue Authority (KRA) failed to meet its revenue collection target of Sh107 billion in the fiscal year ending June 2022, due to the harsh economic environment.
The tax officer raised Sh2.166 trillion, with a performance rate of 95.3 per cent, the first time in two consecutive fiscal years that the agency had failed to hit the target. The target was 2.273 trillion.
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However, tax revenue recorded a growth of 6.6 percent compared to the fiscal year 2021/2022, when revenue collection reached Sh2.031 trillion.
“Revenue performance reflects prevailing economic indicators, notably projected GDP growth of 5.8 percent in fiscal year 2022/23 (Budget Policy Statement 2023) compared to growth of 6.5 percent in fiscal year 2021/22,” Acting Commissioner-General, RISPA Simeo, said in a statement Thursday.
high performance
The tax officer said the amounts collected from excise tax on betting amounted to Sh6.65 billion against a target of Sh5.72 billion, representing a performance rate of 116.2 percent 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 simplified tax transfers from the sector and raised the level of revenue collection,” says Simeo.
The agency connected its systems to those of betting companies in October last year, which allowed for better visibility of the revenue generated by the companies as well as real-time tax collection.
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The digital services tax rose, a growth of 207.9%, to Sh5.33 billion.
The KRA also reported a strong expansion of the tax base as one of the reasons behind its performance for the fiscal year that ended in June 2022. Taxpayers say a total of 940,483 new taxpayers have been brought into the category.
“The Tax Base Expansion Program has enabled the KRA to raise Sh14.65 billion in revenue through initiatives such as hiring landlords under the Monthly Rental Income Obligation (MRI) and the Block Management System (BMS) to identify potential taxpayers,” it says.
Local VAT grew by 12.7 percent to Sh272.45 billion. KRA says the move to electronic tax invoice management systems (eTIMs) in February this year has been instrumental in generating more revenue.
“It is important to note that VAT growth increased to 18.0 percent in February-June 2023 upon implementation of the Tax Invoice Management System (TIMS & eTIMs), from a previously slower growth of 6.7 percent in the first seven months of the 2022/23 fiscal year. Ms. Simiyu.
Slow growing performers
Collections from Pay As You Earn (PAYE) amounted to 494.98 billion shekels, an increase of 7.76 percent, while corporate income tax was recorded at 263.82 billion shekels, representing a growth of 9.89 percent compared to the previous fiscal year.
Collections from customs also registered a single-digit growth of 3.63 percent to Sh754 billion.
The KRA is now targeting to raise Sh2.768 trillion in the current financial year and breach the Sh3 trillion mark by 2024/25.
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