The Kenya Revenue Authority (KRA) surpassed the set revenue target of Sh2.555 trillion for the Financial Year 2024/2025 after collecting Sh2.571 trillion.
This achievement represents a 6.8 per cent growth of revenue collection and a performance rate of 100.6 percent, compared with the Sh2.407 trillion collected in the last financial year.
According to the KRA Commissioner General, Mr. Humphrey Wattanga, the revenue performance reflects the prevailing economic indicators, especially the Gross Domestic Product (GDP) growth of 4.7 per cent (Economic Survey), with notable growth recorded in key sectors like agriculture, forestry and fishing, financial and insurance activities, transportation and storage, and real estate.
Further, overall inflation eased to average at 3.6 per cent in 2024/25 compared to 6.3 per cent in 2023/24, while the exchange rate of the Kenya Shilling against the US Dollar strengthened to an average of Sh129.35/US$ in the current year under review, down from Sh144.1 in the previous year.
In addition, international oil prices per barrel dropped by 12.5 per cent, with these factors leading to aggregate downward adjustment of local fuel pump prices for both petrol and diesel by 11.8 percent and 12.2 percent respectively.
However, Wattanga notes that other factors moved contrary to expectations, thus impacting revenue negatively for instance, the first half of the Financial Year 2024/25 was characterised by numerous economic headwinds, including the shelving of the Finance Bill 2024, high bank lending rates, global tariff wars, and international conflicts.
In particular, overall import values recorded weak growth of 0.04 per cent, affected by drops in import values of fuels and lubricants and food and beverages which recorded declines of 16.4 per cent and 14.6 per cent, respectively, as export values declined by 2.0 per cent especially from horticulture (-2.5%) and tea (-15.4%).
Additionally, access to credit by the private sector, the Commissioner General reveals, remained constrained due to higher commercial bank lending rates in the current year compared to the previous year.
Nevertheless, a downward adjustment in lending rates is anticipated following the Central Bank of Kenya’s (CBK) decision to lower the benchmark rate to 9.75 percent in June 2025.
“As at the end of December 2024, credit extended by commercial banks to the National Government grew by 13.9 per cent, while credit to the private sector declined by 1.1 per cent,” he reported, adding that this contraction in private sector credit dampens the prospects for investment and expansion across key economic sectors.
Notwithstanding these challenges, Wattanga claims that KRA’s robust measures yielded a significant revenue collection turnaround in the second half of the financial year as revenue grew by 9.1 per cent, compared to the 4.5 per cent growth recorded in the first half of the financial year.
The Commissioner General reiterates that this 4.5 per cent growth of the Exchequer Revenue equates to Sh2.323 trillion collected by KRA compared to Sh2.223 trillion collected in the previous financial year, which translates to a performance rate of 99.0 per cent, against a target of Sh2.347 trillion.
KRA also collected Sh248.276 billion on behalf of other government agencies, surpassing the target by Sh40.465 billion, which translated to a performance rate of 119.5 per cent.
On the other hand, Domestic Revenues registered a growth of 4.8 per cent after KRA collected Sh1.688 trillion against a target of Sh1.721 trillion, which translates to a performance rate of 98.1 per cent whereas Customs Revenue recorded a performance rate of 105.9 per cent with a collection of Sh879.329 billion against a target of Sh830.368 billion, translating to a revenue growth of 11.1 per cent, compared to the same period in FY 2023/2024.
Meanwhile, the performance of Key Tax Heads saw the Domestic VAT (Value Added Tax) collection standing at Sh327.336 billion, which reflected a growth of 4.2 per cent compared to the previous year.
Wattanga observes that in the first half of the FY, KRA collected Sh148.374 billion, whereas in the second half of the FY, KRA implemented a raft of VAT compliance initiatives, including strict VAT registration controls and verification of declarations, to seal revenue loopholes, enabling the collection of Sh178.962 billion.
Concurrently, Excise Tax on betting services surpassed the target after registering a surplus of Sh 1.945 billion with a performance rate of 117.2 per cent as the tax head collected Sh 13.233 billion against a target of Sh 11.288 billion.
Betting Tax also registered a performance rate of 103.7 per cent after collecting Sh5.70 billion against a target of Sh5.495 billion.
“KRA collected Sh560.963 billion from P.A.Y.E. (Pay As You Earn), signifying a growth of 3.3 percent,” said the Commissioner General, adding that despite the slow growth, the tax head recorded a performance rate of 99.0 percent.
This slow growth, according to Wattanga, was attributed to the utilisation of adjustment vouchers by taxpayers to offset tax liabilities and policy impacts, which included the adjustment of SHIF and the Housing Levy from relief to allowable deductions before tax computation.
Furthermore, he mentioned that Corporation Tax grew by 9.9 per cent compared to 4.9 per cent in the last financial year, after KRA collected Sh304.833 billion against a target of Sh 321.080 billion. The performance, he highlighted, was boosted by a number of sectors, including ICT, manufacturing, financial, real estate, and wholesale and retail, among others.
On Domestic Excise, the tax head recorded a performance rate of 97.2 per cent, with a collection of Sh69.385 billion. Wattanga points out that the performance is attributed to a decline of revenue remittance from manufacturers of beer and tobacco products by 13.9 per cent and 8.9 per cent, respectively, as KRA continues to enhance compliance measures in the sector.
At the same time, the Commissioner General cited Section 47(2)(b) of the Tax Procedures Act, Cap 469B, which stipulates that approved claims not settled within six months shall be offset against existing and future tax liabilities.
In line with this provision, he divulged that adjustment vouchers amounting to Sh49.673 billion were utilised by taxpayers to settle tax obligations across various tax heads in FY 2024/25 which reflects a significant increase from the Sh24.845 billion utilised during the corresponding period in the previous financial year.
Likewise, Wattanga sums up that significant amounts of adjustment vouchers were utilised across various tax heads, with Corporation Tax accounting for Sh28.622 billion, PAYE for Sh10.422 billion, and Domestic VAT for Sh6.510 billion, among others.
On another note, the Revenue Mobilisation Strategies saw KRA continue to implement its 9th Corporate Plan, which runs for a period of five years during the period under review. Over this period, the Commissioner General remarks that KRA is focusing on enhancing revenue collection, increasing customer satisfaction, digitalising revenue administration and strengthening human resource management.
Into the bargain, he claims the organisation has continued to leverage disruptive technology to enhance efficiency, transparency and effectiveness in revenue collection. These innovations, he reiterates, are part of KRA’s broader digital transformation and tax modernisation strategy to improve compliance, reduce leakages and enhance taxpayer experience.
“Some of these technologies include the Electronic Tax Invoice Management System (eTIMS), which has minimised VAT fraud, improved tax compliance, simplified the VAT filing and payment process, facilitated tax base expansion and increased tax revenue. KRA recently rolled out the eTIMS fuel station system, designed specifically to streamline operations and address compliance challenges previously experienced within the industry,” he exemplified, adding that KRA has also deployed Artificial Intelligence (AI) to analyse scanner images, which has helped in the interception of smuggled goods and sealed revenue leakages.
Moreover, Wattanga denotes that simplicity is one of KRA’s Core Values, aimed at eliminating complexities that taxpayers experience.
He announced that the Authority has simplified the filing of returns through VAT auto-population and adopted mobile and digital payment platforms to streamline tax payments.
In addition, he referred to the introduction of a Centralised Release Office (CRO), which has made cargo clearance at the ports easier and more efficient, subsequently improving cargo clearance time from an expected average of 110 hours to 43 hours and enabling KRA to collect Sh22.7 billion.
As well, the Commissioner General reported that KRA has implemented organisational restructuring within its functional areas of revenue, technology and service to create an agile and responsive tax administration framework, strengthen the digital infrastructure for data-driven decision-making and automation, and improve taxpayer engagement and support.
“Among these changes include the integration of the Large and Medium Taxpayers into a core functional area and the Micro and Small Taxpayers as another core functional area, which provides more personalised support to address taxpayers’ unique needs,” he highlighted.
The functional areas have also supported tax base expansion in alignment with the Medium-Term Revenue Strategy.
Moving forward, Wattanga declares that KRA will increasingly rely on data analytics, Artificial Intelligence, Machine Learning and the Enterprise Application Programming Interface (API) platform. Through this platform (GavaConnect), KRA has so far rolled out the Electronic Rental Income Tax System (eRITS).
This initiative, he notes, is a vital part of KRA’s long-term strategy to simplify tax processes, improve transparency and expand Kenya’s tax base. The API platform facilitates seamless integration between KRA’s systems and third-party platforms, allowing businesses, developers and service providers to automate tax-related services.
Equally, Wattanga posits revenue growth for the period under review was attributed to the implementation of a number of measures, including; Taxation of the digital economy for the same period, which recorded a performance rate of 112 percent after netting Sh14.3 billion, translating to a 32 percent growth from the Sh10.8 billion collected in FY 2023/24. These taxes are collected from non-resident taxpayers in the digital economy, including multinational digital companies.
He highlights that KRA’s initiatives under this strategy include a robust recruitment of non-resident taxpayers and deployment of technology to ensure compliance.
Similarly, the Tax Base Expansion measure aims to onboard taxpayers previously not paying taxes and convert inactive taxpayers into active taxpayers. Wattanga disclosed that the programme enabled KRA to collect Sh24.9 billion in revenue.
Some of the initiatives under TBE include the launch of the Electronic Rental Income Tax System (eRITS) that has provided visibility of rental properties, rental income and occupancy status; recruitment of landlords under the Monthly Rental Income (MRI) programme through a taxpayer mapping process (Block Management System – BMS); recruitment of additional taxpayers; and provision of additional tax obligations based on their income.
The other measure of Taxation at Source means that KRA has integrated with other systems, allowing for an almost real-time collection of information and revenue directly at the source. Some of the interventions under this strategy include the integration of Betting and Gaming Companies into the KRA tax system, which has given the latter real-time access to 141 companies in the gaming and betting sector, enabling both Excise Tax on betting services and Betting Tax to surpass the FY 2024/25 target.
On enhancing collection from debt programmes on non-compliant taxpayers, Wattanga asserts that KRA is mobilising a total of Sh141.261 billion in FY 2024/2025 attributing the performance to follow-ups on demand notices and the debt installment plans agreed upon with taxpayers.
In reference to Tax Amnesty, the Commissioner General revealed that a total of 3,512,835 taxpayers benefited from the programme after they were granted waivers on penalties and interest amounting to Sh95.645 billion. Through the programme, KRA collected Sh29 billion after 116,144 taxpayers voluntarily declared and paid.
Also, in its commitment to efficiency and effectiveness in the reduction of cargo clearance times, he mentioned that KRA has enhanced the iCMS capabilities to allow for Pre-Arrival processing of documents using the Bill of Lading as the base document for the declaration of Customs entries in order to facilitate trade.
Additionally, KRA has spearheaded the formulation of joint Service Level Agreements (SLAs) for sea clearance cargo with 23 Partner Government Agencies (PGAs). This will improve efficiency in clearance of sea imports and exports by ensuring predictability and accountability,” said Wattanga, adding that the tax head has also established three trade facilitation centres along the Northern Corridor—Kainuk, Lodwar and Kakuma which are dedicated to supporting cargo monitoring and facilitating trade with South Sudan, Ethiopia and Uganda.
Describing the Dispute Resolution Framework, he stated that KRA uses the Alternative Dispute Resolution (ADR) framework as a trade facilitation mechanism by ensuring amicable resolution of tax disputes, as opposed to protracted legal processes.
“For the period under review, 970 cases were concluded, enabling release of Sh15.296 billion. This demonstrates KRA’s commitment to promoting compliance through non-adversarial mechanisms,” reaffirmed the Commissioner General, adding that KRA also collected Sh65.09 billion through litigation processes.
While illuminating the Anti-Corruption Measures, Wattanga says KRA’s interventions to combat corruption and seal revenue leakages include implementation of the iWhistle programme, which facilitated collection of Sh6.8 billion from 821 cases reported anonymously; profiling of tax evaders; and review of refunds and debt management processes.
Internally, the Commissioner General discloses, KRA conducts lifestyle audits on staff and runs robust internal awareness campaigns to ensure staff uphold integrity in their work, specifying that through the iWhistle, 45 staff integrity cases were reported and action taken.
For the final measure, he referenced Customer Support Programs, which are aimed at building partnerships and increasing engagements to ensure the public fully participates in revenue administration measures. In FY 2024/25, KRA held a total of 37 engagements with different sectors, nine sensitisations, 15 public participation sessions and nine roundtables, according to the Commissioner General, insisting that these initiatives have played a key role in equipping individuals and other entities with relevant information on taxation.
On behalf of the KRA Board of Directors and staff, the Commissioner General appreciated all Kenyans for remaining committed to honouring their tax obligations, which play a key role in Kenya’s economic sustainability and development.
As KRA commemorates its Pearl Anniversary this July, the organisation celebrates remarkably significant milestones over the last 30 years, growing revenue collection from Sh 122.066 billion in 1995 to more than Sh2.5 trillion this year.
Meanwhile, KRA remains committed to simplifying tax payment processes and ensuring a positive taxpayer experience.
The tax head also emphasises its unwavering dedication to upholding integrity and professionalism in all interactions with taxpayers.
By Michael Omondi
