The Kenya Revenue Authority (KRA) collected Sh 1.669 trillion in the last financial year compared to Sh 1.607 trillion collected in the 2019-20 surpassing the target despite the Covid 19 pandemic that affected businesses. The last time KRA surpassed its revenue target was 8 years ago.
In the FY 2020/2021 revenue target as reflected in the 2021 Budget Policy Statement was Kshs. 1.652 trillion which KRA surpassed with a surplus of Kshs. 16.808 billion.
“This represents a performance rate of 101% and revenue growth of 3.9% compared to last Financial Year. This performance is consistent with the prevailing economic indicators, especially the projected GDP growth of 0.6% in 2020,” KRA Commissioner General Githii Mburu said, adding that KRA has doubled revenue collection in the last decade.
The Domestic Taxes Department (DTD) collected Sh 1.039 trillion during the financial year translating to a performance rate of 99.8% while Customs and Border Control (C&BC) collected Kshs. 624.77 billion surpassing its target of Kshs. 606 billion representing a performance rate of 103.0% and recording a surplus of Kshs. 18.248 billion.
Petroleum taxes amounted to Kshs. 226.680 billion posting a growth of 34.5% and surplus of Sh. 12.252 billion against target, while Non-Oil revenue recorded a growth of 16.4% with collections amounting to Kshs. 398.089 billion which was above target by Kshs. 5.996 billion.
Corporation Tax recorded a growth of 3.7% in 2020/21. This performance was driven by increased remittance from Energy, Agriculture and Construction sectors which grew by 222.7%, 33.1% and 31.9% respectively. This is despite the reduction of the tax rate from 30% to 25% in the first half of the financial year.
PAYE declined by 9.3% in FY 2020/21, a drop from an average growth of 2.0% recorded during the same time last year. The decline was driven by reduction in employment emanating from measures taken by mainly private firms to reduce operating costs as a result of the Covid-19 pandemic. The tax head was also affected by the reduction of the top PAYE rate from 30% to 25% in the first half of the year and a 100% tax relief for persons earning below Ksh. 24, 000 per month.
Withholding Tax recorded a growth of 3.8% in 2020/21, which is a drop from an average growth of 18.2% recorded last year. The performance was negatively impacted by depressed economic growth due to the impact of Covid-19 pandemic.
Domestic Excise recorded a growth of 12.0%, compared to a decline of 6.4% recorded in the last financial year. The performance turnaround is attributed to gradual reopening of the economy and extended operating hours for bars and restaurants.
Domestic VAT recorded a decline of 7.9%. The performance of the tax head was primarily affected by the COVID-19 pandemic, which saw business turnovers decline. The decline was also affected by reduction of VAT rate from 16% to 14%.
During the period under review, KRA implemented a number of Revenue Enhancement Initiatives that enabled the Authority to enhance revenue collection.
The good performance is also attributed to Tax Base Expansion (TBE) which was a key deliverable in the 7th Corporate Plan. Through this initiative, KRA recruited more taxpayers through the newly implemented taxes including Digital Services Tax, Minimum Tax, and Voluntary Tax Disclosure among others.
The introduction of Alternative Dispute Resolution (ADR) also saw taxpayers come forward to find an amicable solution in disputes with KRA. With the main objective being to ensure faster, objective and efficient resolution of tax disputes, ADR enabled KRA to unlock Kshs. 31.435 billion in taxes out of 552 cases resolved during the FY 2020/2021.
The automation of KRA processes, especially during the Covide-19 pandemic, enabled the Authority to improve taxpayers’ services and subsequently collect more revenue. During this period, all goods declared under the Single Customs Territory framework were monitored using the Regional Electronic Cargo Tracking System (RECTS) and all Customs related inquiries and applications were also processed online.
