BEATING ODDS

KRA surpasses collection target two months in a row

The agency missed a half-year tax collection target by Sh109.9 billion as Covid-19 accelerated the disruption of economic activities.

In Summary
  • It has attributed the two months’ positive performance to the resurgence of the economy.
  • The agency is expected to collect at least  Sh1.56 trillion by end of June. 
KRA Commissioner General James Githii Mburu.
KRA Commissioner General James Githii Mburu.
Image: COURTESY

Kenya Revenue Authority surpassed its collection target for the second month in a row in January amid Covid-19 hurdles, signaling economic recovery. 

The data from the revenue agency shows Sh142 billion was collected during the month under review against a target of Sh138 billion, 6.7 per cent growth.  

In December, the taxman brought home more than Sh166 billion in taxes, beating the Sh164 billion target - a performance rate of 101.3 per cent. 

KRA attributed the two months’ positive performance to the resurgence of the economy.

According to the Quarterly Gross Domestic Product Report by the Kenya National Bureau of Statistics, the economy contracted by 1.1 per cent in the third quarter of 2020, which was an improvement from a contraction of 5.5 per cent in the second quarter of 2020.

"In addition, the relaxation of the stringent Covid-19 containment measures, the implementation of the Post Covid-19 economic recovery strategy 2020-2022 by the government and the sustained implementation of enhanced compliance efforts by KRA,'' Mburu said. 

Coronavirus, which was first reported in the country in mid-March almost crippled social economic activities in the country, hurting KRA's collection plan. 

The agency missed a half-year tax collection target by Sh109.9 billion as Covid-19 accelerated the disruption of economic activities.

In the month, taxes on international trade boosted the collection of the Customs and Border Control Department to Sh54.9 billion, a growth of 9.7 per cent, and a revenue surplus of Sh6.053 billion.

According to KRA boss James Mhuru, the customs revenue was achieved through a sustained daily average of non-oil revenue at Sh1.7 billion compared to Sh1.744 billion in December 2020, which was the highest ever daily average collection for customs revenue.

He added that exemptions and remissions in customs declined by 4.8 per cent, positively impacting the revenue base by Sh283 million.

The domestic taxes also registered an improved performance at 97.1 per cent of the target, which, albeit short of hitting the monthly target, was the best return since the start of the Covid-19 pandemic.

The department recorded an improved growth of five per cent in January after suffering a decline of 10.4 per cent in December 2020.

Excise domestic taxes recorded a growth of 42.8 per cent after collecting a surplus of Sh3.422 billion while withholding tax surpassed the target by Sh396 million, a growth of 8.2 per cent.

Pay As You Earn (PAYE) taxes recorded a performance at 98.6 per cent, reflecting an uptick in employment coming into the new year.

Corporation taxes levied on resident companies, recorded a revenue collection growth of 44.4 per cent. This was a performance rate of 119.4 per cent against the target, an improvement from December 2020 performance rate which stood at 93.5 per cent. 

The Value Added Tax (VAT) domestic remittances grew by 8.5 per cent. This was a huge improvement after a decline of 19.8 per cent achieved in December 2020. The performance is expected to further improve as businesses continue to convert purchases to sales.

With the implementation of the Post Covid-19 Economic Recovery Strategy 2020-2022, the tax authority expects revenue collection performance to accelerate further within forecast rates.

"With a positive forecast on the economic growth which is projected to bounce back at 6.4 per cent in 2021 from the projected growth of 0.6 per cent in 2020, KRA remains positive on the response of revenue to the economic resurgence," Mburu said in a statement. 

KRA is expected to collect at least  Sh1.56 trillion by end of June.