KRA sustains upward revenue trajectory in quarter 2

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Kenya Revenue Authority (KRA) collected Sh154.383 billion in the month of October 2021 against a target of Sh142.285 billion, recording an impressive performance of 108.5 percent and a growth of 23.2 percent, sustaining positive performance into Quarter Two of the Financial Year 2021/22.

KRA’s Commissioner General Githii Mburu, said that they commenced the new financial year on an upward trajectory after surpassing its (July-September 2021) target of Sh461.653 billion by Sh15.053 billion, recording a 30.0 percent growth.

According to Mburu, this implies that cumulatively KRA realized collections of Sh631.090 billion for the period July – October 2021 against a target of Sh603.939 billion, translating to a performance rate of 104.5 percent, a growth of 28.3 percent and a surplus of Sh27 billion.

“During the month under review, Customs and Border Control (C&BC) exhibited an excellent performance after collecting Sh57.374 billion against a set target of Sh51.200 billion reflecting a performance rate of 112.1 per cent and a surplus of Sh6 billion,” said Mburu.

He added that domestic Taxes recorded a performance rate of 106.5 per cent with a collection of Sh96.616 billion against a target of Sh90.700 billion recording a surplus of Sh5.9 billion. Pay As You Earn (PAYE) registered a collection of Sh37.001 billion against a target of Sh36.462 billion registering a performance of 101.5 percent.

Mburu said that the sustained strong performance is a reflection of the improving global economic environment as well as the implementation of revenue enhancement initiatives by the Authority.

“The African Development Bank (AfDB) projects that the East African Economy will grow by 4.1 per cent in 2021 from 0.4 per cent in 2020. The Gross Domestic Product is expected to grow by 5.3 percent in Financial Year (FY) 2021/22 as per 2021 Budget Policy Statement,” he said.

He explained that the improved performance is further anchored on implementation of key strategies as espoused in the 8th Corporate Plan including tax base expansion which focuses on bringing citizens and business previously not paying taxes into the tax net, enhanced compliance efforts which focuses on ensuring taxpayers file returns and pay correct taxes, addressing tax evasion and illicit trade which focuses on ensuring businesses whose profitability model is based on tax evasion are investigated and taxes recovered, extensive use of data and intelligence to unearth unpaid taxes, taxpayer support programs including taxpayers’ education and constant engagements to address taxpayers concerns as well as alternative dispute resolution.

He highlighted that currently, there are over 570 tax disputes tied up in Courts with tax assessments of Sh150 billion.

Mburu said that other strategies on improving revenue collection include simplification of tax processes through use of technology, collaboration with other Government Agencies under the whole Government approach in the fight against economic crimes.

“Kenya’s tax to Gross Domestic Product (GDP) ratio currently stands at 13.8 percent, indicating the need to continue enhancing tax collection and reducing tax expenditure in the form of exemptions and incentives to achieve the desired rate of over 20 percent,” he said.

He added that Kenya’s tax gap remains high (45 percent for VAT as reported by IMF in 2017), indicating the need to sustain our tax base expansion efforts and upscaling of the fight against tax evasion and illicit trade.

The Authority is optimistic that sustained compliance efforts will continue to yield positive outcomes for the country.

By Joseph Ng’ang’a

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