Kenya: Treasury raises tax goal for Kenya Revenue Authority by Sh33 billion

The Treasury has raised the target for tax collections this financial year by Sh33.7 billion on the back of a stellar performance in the first 10 months.

Treasury secretary Ukur Yatani last Friday revealed a new tax goal of slightly more than Sh1.74 trillion for the fiscal year ending June, marginally higher than the initial Sh1.71 trillion.

This came after the Kenya Revenue Authority collected nearly Sh1.46 trillion between July 2021 and April 2022, which is higher than the Sh1.42 trillion target on a prorated target.

The tax receipts in the 10-month period were Sh265.64 billion or 22.31% higher than Sh1.19 trillion the KRA collected in a similar period in the prior year.

“Throughout the year, we have been above target and generally that means you are doing well, but it could also suggest that the target was not high enough. Probably, they believe they didn’t target high enough,” Nikhil Hira, a partner at tax advisory firm Kody Africa LLP, said.

The over-performance in tax receipts this fiscal year has largely benefited from full re-opening of the economy after coronavirus infections fell, aggressive use of data by the taxman to catch cheats and increased taxation which has raised the cost of basic commodities.

Some of the new taxation measures this financial year include 16% levy on cooking gas, raising of excise duty on airtime and data to 20% from 15%, introduction of a 20% duty on fees and commissions earned on loans as well as a 7.5% tax on gambling wins.

The International Monetary Fund last month backed Kenya’s “important tax policy measures”, arguing they have resulted in “strong” collections.

“These resources bring resilience that will allow cushioning part of the impact of the sharp increase in global energy and fertilizer prices on households and businesses while still remaining within the authorities’ fiscal targets for FY2021/22,” IMF Mission Chief to Kenya Mary Goodman says in a statement following the review between March 31 and April 22.

KRA Commissioner-General Githii Mburu in January cited “use of data and intelligence to unearth unpaid taxes” as well as “technology to simplify tax processes” as key drivers of revenue growth.

“The excellent revenue performance has been enhanced by sustained implementation of key strategies as enshrined in KRA’s 8th Corporate Plan (strategic plan 2021-24),” Mr. Mburu said in a statement on January 14.

The higher target comes in an environment of rising cost of goods and services largely because of global supply constraints which have been exacerbated by the Ukraine war.