List of KRA Strategies that Pushed Revenue Collection to KSh 2.571 Trillion in 2024/2025 FY
The Kenya Revenue Authority (KRA) exceeded its revenue target for the 2024/2025 financial year by KSh 104 billion.
In a statement, the government's principal revenue collector revealed it collected KSh 2.571 trillion against a target of KSh 2.555 trillion.
This represents a performance rate of 100.6% and a growth of 6.8% compared to the KSh 2.407 trillion collected during the 2023/2024 financial year.
How much did KRA collect from domestic and customs revenue?
KRA collected KSh 1.688 trillion in domestic revenues versus a target of KSh 1.721 trillion (a 98.1% performance rate), representing a 4.8% rise.
Customs revenue attained a performance rate of 105.9% as KRA collected KSh 879.329 billion out of a target of KSh 830.368 billion, an 11.1% increase compared to the last fiscal year.
Performance of Key Tax Heads
Domestic VAT: Domestic VAT collection stood at Kshs. 327.336 billion, reflecting a growth of 4.2% compared to the previous year. In the first half of the FY, KRA collected Kshs. 148.374 Billion. In the second half of the FY, KRA implemented a raft of VAT compliance initiatives to seal revenue loopholes, enabling the collection of Kshs. 178.962 Billion. These initiatives included strict VAT registration controls and verification of declarations.
Betting Taxes: Excise Tax on betting services surpassed the target after registering a surplus of Kshs. 1.945 billion with a performance rate of 117.2%. The tax head collected Kshs. 13.233 Billion against a target of Kshs. 11.288 Billion. Betting Tax also registered a performance rate of 103.7% after collecting Kshs. 5.70 Billion against a target of Kshs. 5.495 Billion.
Pay As You Earn (P.A.YE): KRA collected Kshs. 560.963 billion from P.A.Y.E, signifying a growth of 3.3%. Despite the slow growth, the tax head recorded a performance rate of 99.0%. The slow growth was attributed to the utilisation of adjustment vouchers by taxpayers to offset tax liabilities and policy impacts, which included the adjustment of SHIF and Housing Levy from relief to allowable deductions before tax computation.
Corporation Tax: Corporation Tax grew by 9.9% compared to 4.9% in the last financial year, after KRA collected Kshs. 304.833 Billion against a target of Kshs. 321.080 Billion. The performance was boosted by a number of sectors, including ICT, manufacturing, financial, real estate, wholesale and retail, among others.
Domestic Excise: The tax head recorded a performance rate of 97.2%, with a collection of Kshs. 69.385 Billion. The performance is attributed to a decline in revenue remittance from manufacturers of beer and tobacco products by 13.9% and 8.9% respectively. KRA continues to enhance compliance measures in the sector.
At the same time, there was a 4.2% jump in domestic Value-Added Tax (VAT), which totalled KSh 327.336 billion.
Pay as You Earn (PAYE), corporation tax and customs (non-oil taxes) registered growths of 3.3%, 9.9% and 10.3%, to KSh 560.95 billion, KSh 301.81 billion and KSh 541.02 billion, respectively.
How did KRA exceed its revenue target?
KRA explained that it employed several strategies to achieve excellent performance.
1. Debt collection initiatives
KRA increased its debt collection efforts against noncompliant taxpayers, collecting KSh 141.261 billion during the review period.
The performance was attributed to debt instalment initiatives that were agreed upon with taxpayers and the follow-ups on demand notices.
2. Digital economy taxes
The digital economy's taxation during the reviewed period had a performance rate of 112%.
This saw the taxman generate KSh 14.3 billion, a 32% increase from the KSh 10.8 billion collected in FY 2023/2024.
3. Expansion of the tax base
KRA collected KSh 28.5 billion in revenue by expanding the tax base in the 2024/2025 FY.
The programme featured the introduction of the Electronic Rental Income Tax System (eRITS) and the recruitment of landlords for the Monthly Rental Income (MRI) programme using a taxpayer mapping process (Block Management System, or BMS.
KRA also increased its taxpayer count and issued additional tax obligations based on their income.
4. Anti-corruption measures
KRA undertook efforts to combat corruption and stop revenue leaks, including profiling tax evaders, reviewing refund and debt management procedures.
It implemented the iWhistle programme, which made it easier to recover KSh 6.87 billion from 821 cases that were reported anonymously.
5. Tax at source
The authority incorporated gaming and betting businesses into its system.
This gave the agency real-time access to 141 companies, making it possible for the betting tax and the excise tax on betting services to exceed the year's target.
6. Dispute resolution framework
The framework improved revenue collection through Alternative Dispute Resolution (ADR), enabling the recovery of KSh 18.898 billion from 1,152 resolved cases.
KRA also secured KSh 65.09 billion via litigation processes, achieving a performance rate of 195%.
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Source: TUKO.co.ke
