KRA collects record Ksh.2.84 trillion as tax revenue jumps 10.6%

The Kenya Revenue Authority (KRA) has announced that it collected Ksh.2.844 trillion in the 2025/26 financial year, registering its strongest revenue growth in recent years as improved performance in key sectors of the economy boosted tax collections despite a challenging business environment.

According to the taxman, revenue collection grew by 10.6 per cent compared to the previous financial year, with collections rising by Ksh.272.9 billion from Ksh.2.572 trillion recorded in 2024/25.

Manufacturing, Energy, Financial and Insurance, Information and Communication Technology (ICT), and Wholesale and Retail Trade emerged as the biggest contributors to government revenue, jointly accounting for about 62 per cent of all taxes collected during the year.

"Revenue collection for the Financial Year 2025/2026 registered a robust double-digit growth of 10.6%, significantly outperforming the 6.8% growth recorded in the previous financial year," KRA said in a statement.

"These sectors that account for 27.4% of overall nominal GDP (raw economic metric not adjusted for inflation or deflation) recorded an aggregate revenue growth of 8.0%."

The manufacturing sector led the pack after contributing Ksh.462 billion, up from Ksh.423 billion in the previous financial year, representing a 9.2 per cent growth.

KRA attributed the performance largely to Value Added Tax (VAT), Pay As You Earn (PAYE), Excise Duty and Corporation Tax.

The energy sector followed with collections of Ksh.445 billion, representing a 9.1 per cent increase, driven mainly by strong performance in customs oil taxes.

Meanwhile, the Financial and Insurance sector contributed Ksh.320 billion, while the ICT sector posted a 7.9 per cent growth after generating Ksh.248 billion.

Wholesale and Retail Trade also recorded strong performance, collecting Ksh.288 billion, a 10.3 per cent increase from the previous financial year.

Overall, exchequer revenue rose to Ksh.2.568 trillion, representing a growth of 10.5 per cent, while revenue collected on behalf of other government agencies increased by 11.2 per cent to Ksh.276.1 billion.

KRA also surpassed its customs revenue target after collecting Ksh.988.8 billion against a target of Ksh.980.8 billion, translating to a performance rate of 100.8 per cent. Domestic revenue, on the other hand, stood at Ksh.1.851 trillion, achieving 93 per cent of its target.

Among the key tax heads, Corporation Tax registered the highest growth at 14 per cent, with collections reaching Ksh.347.1 billion, while PAYE collections increased by 6.7 per cent to Ksh.598.8 billion.

The authority also reported a sharp rise in betting-related taxes. Excise tax on betting services exceeded its target after collecting Ksh.16.5 billion, reflecting a 24.9 per cent growth and a performance rate of 115.9 per cent.

Betting Tax and Withholding Tax on betting and gaming also recorded growth of 20.3 per cent and 59.2 per cent respectively.

Digital taxes also continued to gain traction, with Significant Economic Presence Tax (SEPT), formerly Digital Service Tax, doubling to Ksh.1.6 billion following the expansion of its scope under the Finance Act, 2025.

KRA attributed the strong revenue performance to increased adoption of technology, including wider use of the Electronic Tax Invoice Management System (eTIMS), integration of tax systems with the Integrated Customs Management System (iCMS) and iTax, artificial intelligence-powered analytics and non-intrusive cargo scanners to curb tax evasion.

The authority said initiatives such as pre-populated tax returns, digital taxpayer services, integration with the Integrated Financial Management Information System (IFMIS) and real-time monitoring of betting companies had also strengthened compliance and reduced revenue leakages.

Other interventions that boosted collections included tax base expansion, debt recovery programmes, alternative dispute resolution mechanisms and enhanced intelligence-led enforcement.

KRA now says it plans to deepen digital tax administration by expanding electronic invoicing, scaling up real-time revenue monitoring, establishing a Data Analytics Centre of Excellence and increasing the use of artificial intelligence to enhance compliance and improve taxpayer services.

The authority maintained that the reforms are expected to strengthen voluntary tax compliance, improve efficiency in revenue collection and support the country's long-term economic growth.