DEFIANCE

KRA records jump in revenue to Sh1.6 trillion despite Covid-19

Reports a performance rate of 97.9%

In Summary
  • Revenue collection by the Domestic Taxes Department experienced a growth of four to Sh1.092 trillion.
  • A decline in employment rate saw a slow growth on Pay As You Earn (PAYE) taxes which registered a paltry two per cent increase.
The KRA headquarters at the Times Towers.
The KRA headquarters at the Times Towers.
Image: FILE

Kenya Revenue Authority (KRA) has recorded a slight 1.7 per cent jump in revenue collection for the financial year 2019/20 despite a struggling economy ravaged by the Covid-19 pandemic.

 Revenue collected between July 2019 and June 2020 reached a new high of Sh1.607 trillion, compared to Sh1.580 trillion collected in the same period in 2018/19.

This represents a performance rate of 97.9 per cent compared to the last financial year.

“The performance is favourable and matches the prevailing economic indicators, especially the projected GDP growth of between 1.5 per cent and 2.3 per cent in 2020,” commissioner general Githii Mburu said in a statement yesterday.

 In addition, KRA collected other monies including Agency Fees amounting to Sh97.1 billion.

This is revenue collected on behalf of other government agencies mainly at the ports of entry, which includes road maintenance levy, airport revenue, aviation revenue, and petroleum development fund.

 The exchequer revenue grew by 2.2 per cent with a collection of Sh1.510 trillion compared to Sh1.477 trillion collected in 2018/19, translating to a performance rate of 98.6 per cent against the target.

Revenue collection by the Domestic Taxes Department experienced growth of four per cent in FY 2019/20, down from average growth of 13.9 per cent recorded in the period July 2019 to February 2020.

 The department collected Sh1.092 trillion in 2019/20 translating to a performance rate of 97.8 per cent against the target. Customs and Border Control revenue collection amounted to Sh510.63.

The revenue collection registered a reduction of 2.8 per cent compared to the previous financial year. 

During the period, corporation tax recorded a growth of 4.8 per cent in FY 2019/20 which is however a drop from average growth of 8.2 per cent recorded between July 2019 and February 2020. 

This was driven by increased remittance from finance and insurance and manufacturing sectors which account for about half of total corporation tax collections.

A decline in employment rate saw a slow growth on Pay As You Earn (PAYE) taxes which registered a paltry two per cent increase compared to 11 per cent recorded between July 2019 and February 2020.

This is mainly on reduced operating activities by private firms in the fourth quarter, the taxman noted yesterday.

“The tax head was also majorly affected by the reduction of the top PAYE rate from 30 per cent to 25 per cent and a 100 per cent tax relief for persons earning below Sh 24, 000 per month,” Mburu said.

In April, President Uhuru Kenyatta signed into law the Tax Laws (Amendment) Bill, 2020, putting in place a raft of measures to relieve individuals and corporations from taxes amid Covid-19 effects on the economy.

This included lowering of Value Added Tax rate from 16 to 14 per cent.

On withholding tax, the tax head recorded a growth of 18.2 per cent in 2019/20, which is a drop from average growth of 29.1 per cent recorded between July 2019 and February 2020.

“This performance was boosted by increased Withholding Tax remittance from interest component which grew by 4.7 per cent, “ Mburu said.

Remittance from dividends component grew by 13.6 per cent, management, professional, training fees components recorded growth in remittance of 6.8 per cent, while remittance from contractual fees grew by 15.9 per cent.

Domestic excise taxes however recorded a decline of 6.4 per cent from average growth of 4.3 per cent, mainly attributed to the effects of the Covid-19 pandemic, which contributed to the decline of production of excisable products like cigarettes, spirits, keg beer and non-keg beer.

 Domestic VAT equally recorded a reduction of seven per cent in FY 2019/20, a dip from average growth of 2.8 per cent recorded between July 2019 and February 2020.

“The performance of the tax head was majorly impacted by the Covid-19 pandemic, which saw business turnovers decline. In addition, reduction of VAT rate from 16 per cent to 14 per cent also had an adverse effect on the tax head’s performance,” Mburu said yesterday.

In trade taxes, non-oil revenue streams recorded a decline in remittance of 3.5 per, attributed to the slow growth in non-oil imports.

The tax head was also affected by drop-in activities at airports (passenger arrivals) due to airport closures and the adjustment of the VAT rate to 14 per cent.

 Oil revenue recorded a decline of 1.4 per attributed to the decline of overall oil import volumes by 4.9 per cent in the year.

Mburu yesterday commended compliant taxpayers for honouring their obligation despite the unprecedented challenges brought about by the Covid-19 pandemic.