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KRA surpasses target for first time in 8 years

NEWS
By Graham Kajilwa | July 4th 2021
Commissioner General Kenya Revenue Authority Githii Mburu during the launch of the 6th annual Tax Summit, November 4, 2020. [Jonah Onyango, Standard]

Kenya Revenue Authority (KRA) surpassed its revenue target for the year ended June 30, 2021, after collecting Sh1.669 trillion despite the economic slump resulting from the Covid-19 pandemic.

The set target in the Budget Policy Statement stood at Sh1.652 trillion, meaning the taxman raised Sh16.81 million more.

In the previous financial year, KRA collected Sh1.607 trillion.

It is the first time in eight years that the taxman has surpassed its revenue target, the last being in the 2013-14 financial year.

“This represents a performance rate of 101 per cent and revenue growth of 3.9 per cent compared to last financial year,” said KRA Commissioner General Githii Mburu in a statement.

“This performance is consistent with the prevailing economic indicators, especially the projected gross domestic product growth of 0.6 per cent in 2020.” 

The revenue has more than doubled in the last 10 years from Sh707 billion to the current Sh1.669 trillion, a growth of 136 per cent.

The Domestic Taxes Department collected Sh1.039 trillion during the financial year, which a performance rate of 99.8 per cent.

Commissioner General Kenya Revenue Authority Githii Mburu. [Jonah Onyango, Standard]

Customs and Border Control collected Sh624.77 billion, surpassing its target of Sh606 billion by Sh18 billion.

“Petroleum taxes amounted to Sh226.68 billion, posting a growth of 34.5 per cent and surplus of Sh12.252 billion against the target, while non-oil revenue recorded a growth of 16.4 per cent with collections amounting to Sh398.089 billion, which was above target by Sh5.996 billion,” Mr Mburu said.

Corporation tax recorded a growth of 3.7 per cent.

“This performance was driven by increased remittance from energy, agriculture and construction sectors which grew by 222.7 per cent, 33.1 per cent and 31.9 per cent respectively,” the statement said.

“This is despite the reduction of the tax rate from 30 per cent to 25 per cent in the first half of the financial year.”

Pay As You Earn (Paye) declined by 9.3 per cent in the year under review from an average growth of two per cent.

This was due to reduction in employment emanating from measures taken by firms to reduce operating costs as a result of Covid-19 pandemic.

It was also affected by reduction of Paye rate from 30 per cent to 25 per cent in the first half of year and 100 per cent tax relief for persons earning below sh24, 000.

Withholding tax recorded a growth of 3.8 per cent in 2020-21, a drop from average growth of 18.2 per cent.

Commissioner General Kenya Revenue Authority Githii Mburu. [Boniface Okendo, Standard]

Domestic tax grew by 12 per cent, courtesy of extended hotel, bars and restaurants opening while domestic value-added tax recorded a decline of 7.9 per cent, attributed to reduction of the rate from 16 to 14 per cent.

“The good performance is also attributed to tax base expansion which was a key deliverable in the seventh corporate plan,” said the commissioner general.

“Through this initiative, KRA recruited more taxpayers through the newly implemented taxes including digital service tax, minimum tax and voluntary tax disclosure, among others.”

He said active taxpayers increased from 3.94 million to 6.1 million.

The introduction of Alternative Dispute Resolution (ADR) also saw more taxpayers come forward to find amicable solutions with KRA. 

“ADR enabled KRA to unlock Sh31.435 billion in taxes out of 552 cases resolved during the 2020-21 financial year,” the statement added.

“The enhanced recovery of tax arrears saw KRA mobilise Sh93.7 billion in the financial year compared to Sh84.7 billion collected in the 2019-20financial year.”

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