KRA collections up 11% to Sh2.4 Trillion on better compliance

Kenya’s total revenue collection for the fiscal year 2023/24 hit Kes2.407 trillion, marking an 11.11 percent jump year-on-year, an update from the Kenya Revenue Authority shows.

According to the taxman, this increase corresponds to a 95 percent performance rate in a year when the exchequer collections stood at Kes2.223 trillion, up 9.5 percent compared to FY2022/23.

KRA’s strong performance was underscored by huge gains across various tax categories. Notably, agency collections surged by 34.93 percent to Kes184.03 billion during the period under review.

VAT and Customs Collections

KRA said that domestic VAT collections in the year to June surpassed the Kes300 billion mark, closing the period at KEs314.16 billion, reflecting a performance rate of 102.06 percent.

This strong performance was largely attributable to the taxman’s rollout of the Electronic Tax Invoice Management System (eTIMS), which has streamlined tax processes and improved compliance across the industry. Starting 1st September 2023, all taxpayers in Kenya, including those who are not registered for VAT were forced to onboard and issue invoices through eTIMS as provided for under the the Finance Act, 2023.

This law also provided that effective 1 January this year, business expenses not supported with valid TIMS or eTIMS-generated invoices would not be eligible for income tax deduction. The only exceptions to this stringent requirement were limited to expenses such as investment allowances, interest, air passenger ticketing, emoluments, and imports.

At the same time, customs collections also demonstrated a solid performance, defying tough trade challenges to hit Kes791.368 billion, an increase of 4.9 percent year-on-year, with a performance rate of 94.6 percent.  

Read also: Inside KRA’s tax penalties and interest amnesty program

PAYE and Corporate income collections

In the year, improved tax compliance and growth in employment numbers saw Pay As You Earn (PAYE) collections crossed the Kes500 billion threshold, closing the period at Kes543.19 billion, reflecting a 9.7 percent increase compared to the previous year.

Corporate Income Tax mobilized Kes278.16 billion, marking a 4.9 percent jump and reflecting a performance rate of 93.4 percent compared to the year ended June 30, 2023.

KRA disclosures show that the Capital Gains Tax segment was also a standout performer, managing to mobilize Kes8.38 billion, a performance rate of 108.7 percent, indicating increased investment activity and improved compliance reporting of capital transactions in the country.

In a year that prices of most commodities went up due to inflation, and higher import costs, domestic excise collections closed the year at Kes73.62 billion, up 8.1 percent year on year, reflecting a performance rate of 99.6 percent, KRA said.

Additionally, the taxman’s tax amnesty program, which concluded on June 30, managed to realize Kes43.9 billion from a total of 2,617,111 taxpayers, reflecting an 87 percent performance rate of the program.

This initiative provided taxpayers with an opportunity to regularize their tax affairs, contributing to the taxman’s overall collections.

Debt collection initiatives yielded Kes103.4 billion, as the taxman went out to recover outstanding liabilities from entities. Additionally, the alternative dispute resolution mechanism mobilized KES21.9 billion from a total of 1,184 concluded cases handled in the year under review.

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