KRA projects rebound in revenue collection as economy stabilizes

The Kenya Revenue Authority (KRA) says it expects normalizing in its revenue collection efforts as the economy continues to open up.

The tax man says it has since witnessed the worst of the pandemic on revenue mobilisation efforts with the gap to collection targets narrowing in recent months.

KRA for instance says excise duties, which largely represent levies on alcohol and tobacco sales, have shown signs of rebound growing for the first time in over four months in August.

“We can say the worst is behind our backs. In July we moved from a 65 per cent performance to 82 per cent. So far in August, we expect to move closer to 100 per cent in spite of all the difficulties,” said KRA Acting Commissioner for Domestic Taxes Stephen Kyande.

KRA took a massive hit to its ordinary revenue mobilisation last year as it collected a combined Ksh.1.573 trillion against an original target of Ksh.1.88 trillion.

The slump in collections is partly attributable to a widespread economic slump which saw the tax man miss out on key income tax collections from Pay As You Earn (PAYE) and corporation tax as job cuts and company closures followed the pandemic.

Moreover, recent policy measures which include the lowering of VAT from 16 per cent to 14 per cent hit the tax basket to further the gap in collections.

KRA Senior Tax Accountant Alex Mwangi said the authority has put into consideration the disruption caused by the pandemic as he expresses optimism on hitting the set annual collection target.

“All measures were taken into consideration while generating the target for the financial year. If you look at the required growth to meet the target is about seven per cent,” he said.

KRA is expected to mobilize Ksh.1.633 trillion from its different revenue streams including Ksh.1.568 trillion as tax revenue and Ksh.66.1 billion in non-tax income.