KRA collected Ksh.166B in December against Ksh.164B revenue target

The Kenya Revenue Authority (KRA) has ended an eight-month rot featuring reduced tax collections as tax receipts rose for the first time in December.

Data from the tax man shows December tax receipts at Ksh.166 billion against a target of Ksh.164 billion representing a 3.5 per cent growth over the same period in 2019.

KRA Commissioner General Githii Mburu has attributed the improved receipt to a rebounding economic environment following the significant hit occasioned by the COVID-19 pandemic.

“The improved performance is attributed to the economic recovery following the relaxation of the stringent COVID-19 containment measures and enhanced compliance efforts by KRA in the month of December,” he said in a statement.

Under the review, the Customs and Border Control (C&BC) department recorded the highest ever monthly revenue collection netting Ksh.60.8 billion or an equivalent Ksh.12.2 billion surplus.

Domestic taxes also marked their highest collection rate at 91.1 per cent since the start of the pandemic with the Pay As You Earn (PAYE) tax stream anchoring the growth.

Nevertheless, Value Added Tax (VAT) registered a 19.9 per cent deceleration as firm purchases grew ahead of sales made during the month.

KRA collections remained subdued in the past eight months following the emergence of COVID-19 as a pandemic which forced the government’s hand in instilling tough restriction measures such as bar closures and curfew inhibiting enterprise.

With low business activity prevailing, the tax man took a significant hit in revenue as businesses shut or significantly reduced operations.

At the same time, the government implemented tax relief measures to cushion Kenyans including the waiver of all PAYE taxes to Kenyan’s earning less than Ksh.24,000 a month a long with a partial cut to the rate of VAT and corporation tax.

According to analysis of the statement of actual revenues and net exchequer issues published by the National Treasury, tax receipts plunged by 16 per cent between March and May last year as reduced activity haunted the tax man.

The trend in lethargic receipts continued well into the year with collections in the first quarter of the financial year for instance slacking by 15 per cent from 2019.

However, KRA is now hopeful of reversing the damning trend as it finds impetus from a rebounding macro-economic environment and the roll out of new taxes including the digital services tax (DST), minimum tax and the voluntary tax disclosure program.

Nevertheless, the tax man remains behind its revenue collection target (at the half year stage) under which it is tasked with raising Ksh.1.7 trillion in pure tax receipts according to the latest available data from the Treasury.

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