KRA quarterly collections rise by Ksh.43.2 billion

Net revenue collections by the Kenya Revenue Authority jumped by 13.1 percent to Ksh.372.3 billion in the first three months of the 2019/20 fiscal year pointing to the progression of the tax man’s revenue mobilization.

According to data contained in National Treasury statement of actual revenues and net exchequer issues, growth in the revenue base was recorded across all three months with the highest growth in taxes coming in September where recorded taxes came in at an improved 21.4 percent or an equivalent Ksh.150.9 billion.

July and August collections meanwhile were recorded at Ksh.113.9 billion and Ksh.107.5 billion respectively.

The improved collection is on the back of increased surveillance on compliance which has seen KRA deploy a combination of tax corrective measures including the link of tax payer accounts with third party sources such as Kenya Power billing systems and mobile money accounts.

The drive towards innovative oversight solutions has already paid off for the tax agency which pinned an estimated 30 percent of 2018/19 collections on the leverage on data.

At the same time, KRA has stepped up its crackdown on tax evaders in a measure which has seen tens of business operators summoned and subsequently prosecuted over their denial of key taxes to the tax man.

Recoveries from tax avoidance improved by 60 percent in the 2018/19 fiscal year to Ksh.8.53 billion following court rulings on 222 individual taxes.

KRA expects recoveries in the year to be aided by the increased scrutiny of tax payer accounts as it hopes to net 600 new evaders by the close of the financial year in June 2020.

In essence, the tax man hopes to hit its prescribed revenue ceiling having seen the revenue bull’s eye disappear from sight in recent years.

Revenue collections in the last year for instance fell short of targets by 11 percent on the back of a mix of gaps to compliance and reduced firm investments.

Nevertheless, the continued deterioration of the macro-economic environment may prove to be KRA’s largest bother in meeting targets as the Kenyan economy shift towards lower tax contributory segments.

The share of the higher yielding manufacturing sector to Gross Domestic Product has for instance eased from 10 to 7.7 percent in the last five years while that of agriculture has picked notable to 34.2 percent.

The higher yielding tax segments including manufacturing and finance have continued to take a hit from the choke on private sector credit flows as mirrored in the automation of jobs in the sector and reduced portfolio investments by firms.

KRA is expected to raise a projected Ksh.1.81 trillion by the end of June next year.

The three month collections by KRA are expected to be appraised by Treasury’s Quarterly Economic & Budget Review which is set for publishing in mid-November.

The appraisal will provide context as to whether the tax man’s remains on queue of hitting the prescribed Ksh.1.81 trillion ceiling


Editor’s note:

The article serves as a correction to the previously published article- ‘KRA tax collections fall by 32 percent in first quarter’ which erroneously misquoted quarterly collections at the close of September 2019.