The Kenya Revenue Authority (KRA) has reported a double-digit growth in tax collections for the fiscal year ended June 30, signaling uptick in domestic revenue mobilization despite a challenging economic environment marked by high inflation and external shocks.

In an update on Friday, KRA said total revenue collection in FY2025/2026 hit KES2.844 trillion, representing a KES272.953 billion increase over the previous year's KES2.572 trillion collections. 

During the year, five sectors including manufacturing, energy, financial & insurance, Information and Communication Technology and Wholesale & Retail Trade, accounted for approximately 62 percent of all revenue receipts.

The taxman said these sectors, which collectively represent 27.4 percent of Kenya's nominal GDP, recorded aggregate revenue growth of 8.0 percent.

KRA highligted manufacturing industry, which was the top-performing area with collections of KES462 billion, reflecting a 9.2 percent increase from the previous year's KES423 billion. 

Sector performance

Overall, the manufacturing industry contributed 16.2 percent of total KRA revenue while value added tax (VAT), Pay As You Earn (PAYE), excise duty and corporation tax accounted for 74.6 percent of the sector's contributions.

During the FY, the energy industry accounted for KES 445 billion in collections, driven largely by customs oil taxes, representing a 9.1 percent growth and 15.6 percent of total revenue.

Customs revenue emerged as the standout performer, surpassing its target with a 100.8 percent performance rate. Collections reached KES 988.780 billion against a target of KES 980.794 billion, representing 12.4 percent growth. 

Both oil and non-oil revenue streams performed well, with oil taxes amounting to KES 370.383 billion (102.6 percent of target) and non-oil revenue achieving KES 618.397 billion (99.8 percent performance).

However, domestic revenue registered 9.7 percent growth to KES 1.851 trillion against a target of KES 1.991 trillion, reflecting a 93 percent performance rate.

PAYE Performance

Taxman said PAYE collections reached KES 598.807 billion, growing 6.7 percent, an improvement from the 3.3 percent growth recorded in FY 2024/25. However, this remains below the 8.5 percent average growth recorded in FY 2022/23–2023/24.

The formal sector employment as a share of total employment has declined from 15.7 percent in 2022 to 15.3 percent in 2025, according to the Economic Survey 2026. This structural shift toward informal employment continues to constrain income tax mobilization.

Corporation tax registered its strongest performance in recent years, rising by 14 percent to KES 347.066 billion, up from 9.8 percent growth in FY 2024/25 and 4.6 percent in FY 2023/24. 

The ICT, manufacturing, transportation, energy, and wholesale sectors all accounted for 49.4 percent of corporation tax collections.

Betting taxes posted strong performance with excise tax on betting services surpassing its target by KES 2.267 billion to achieve a 115.9 percent performance rate and 24.9 percent growth.

Kenya's significant economic presence tax (Digital Service Tax) doubled in collections to KES 1.609 billion, reflecting expanded scope following the Finance Act 2025.

Compliance push

KRA attributed the performance to accelerated technology adoption, including the expansion of the Electronic Tax Invoice Management System (eTIMS), which now has 750,915 registered taxpayers. 

Integration of systems such as iTax and the Integrated Customs Management System has enhanced compliance monitoring, the taxman explained.

The Authority's debt collection programs mobilized KES 144.824 billion, while the alternative dispute resolution framework concluded 993 cases, releasing KES 35.062 billion in disputed revenue.

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