TAX COLLECTION

KRA collections up, but misses 2018 target

The National Treasury had revised the target to Sh1.605 trillion for the year 2018/19 due to declined economic activities

In Summary

•The government has collected Sh1.58 trillion in revenue for the financial year ending June 2019 compared to Sh1.435 trillion collected in financial year 2017/18.

•This amount represents a miss by only Sh25 billion as the National Treasury had projected a collection of 1.605 trillion.

The KRA headquarters at the Times Towers.
The KRA headquarters at the Times Towers.
Image: FILE

The government has collected Sh1.58 trillion in revenue for the financial year ending June 2019 compared to Sh1.435 trillion collected in financial year 2017/18.

In the annual revenue performance report for the year 2018/19, showed that the tax revenues amounted to collection of Sh1.477 trillion against Sh1.340 trillion collected in previous year.

This also include other monies including agency fees amounting to Sh103 billion collected by Kenya Revenue Authority on behalf of other government agencies mainly at the ports of entry.

This include railway development levy, traffic fees, land rent and cash in transit among other levies.

“Revenue grew by 11.3 per cent compared to the previous year’s 5.1 per cent growth. Revenue collected has more than doubled over the last seven years from Sh707 billion in FY 2011/12,” KRA stated.

This amount represents a miss by only Sh25 billion as the National Treasury had projected a collection of 1.605 trillion.

This after the Treasury had revised the collection in taxes from Sh1.69 trillion in taxes before revising downwards to Sh1.605 trillion as a result of tough exposures to corporate earnings and job cuts due to declining economic activities.

This also inclusion of Sh1.83 trillion in Appropriation-in-Aid (AiA).

"The performance however compares well with the prevailing economic indicators including GDP growth of 6.1 per cent, and average inflation rate of 5.2 per cent," KRA added. 

The Exchequer managed to collect Sh17.22 billion from oil sector. This represented a 16.3 per cent growth attributed to the 8 per cent VAT tax policy on petroleum which came into effect in September, in enactment of Finance Bill 2018.

It also collected also Sh38.217 billion from non-oil revenues including company income tax and customs.

Domestic taxes grew by 11 per cent, mainly driven by rental income tax which grew by 41.7 per cent.

KRA said corporate tax grew by a minimal 5.5 per cent in the year undermined by growth in investment deductions by 284 per cent compared to last year.

“However, the tax head witnessed a turn-around in the fourth quarter, growing at 12 per cent compared to an average 1.8 per cent over the first three quarters.”

“This was due to bank’s performance with overall growth of 29.3 per cent in the last quarter compared to a decline of 7.9 per cent in the other three quarters,” KRA added.

PAYE grew by 7.9 per cent as a result of subdued growth in the private sector employment while public sector registered a growth of 8.9 per cent driven by upscaling of salaries in the education sector.

The excise on cigarettes and beer saw a 12.3 per cent growth in tax revenue collected from the head.

The performance has been pinned to some initiatives that KRA employed during the year including KRA 7th Corporate Plan that aims to raise the Revenue to GDP ratio from 18.3 per cent as recorded within the 2017/18 financial year to 19.2 per cent by the 2020/21 financial year.

The plan is to be delivered through integration of IFMIS and iTax to ensure all suppliers to national and county government are compliant.

This also include Regional Electronic Cargo Tracking System to tackle transit diversion and tax base expansion with a focus on the informal sector.

During the start of the last quarter, KRA targeted four million taxpayers to submit their returns on the iTax Platform by 30th June 2019.

In 2018, 3.2 million taxpayers filed their returns on the iTax platform for both resident and non-resident categories.