The Kenya Revenue Authority (KRA) has fallen short of its revenue targets for the 2022-2023 financial year despite recording an increase in collections.
Despite a 6.7 percent rise in collections to Sh2.166 trillion the taxman missed its Sh2.273 trillion targets by Sh107 billion.
Among the bands that failed to hit the target is the domestic excise tax which recorded a performance of 91.4 percent ,to reach Sh68.124 billion.
The corporation tax also performed at 94.2 percent to realise a revenue of Sh263.8 billion.
This performance, KRA says, was driven by increased remittance from sectors like, finance and insurance; information and communication, manufacturing, wholesale and retail trade; and electricity, oil, and gas.
These sectors contributed 77.8 per cent of the corporation taxes.
“The revenue performance was affected by the slowed domestic economic growth in 2022 which went down to 4.8 percent from 7.6 percent in 2021. This mirrors the World real GDP growth that decelerated to 3.4 per cent in 2022 from a growth of 6.0 per cent in 2021,” KRA acting commissioner general,Risper Simiyu, said in a statement.
According to the taxman, collections from the excise tax on betting amounted to Sh6.65 billion, surpassing the target of Sh5.72 billion.
This represents a performance rate of 116.2 percent, resulting in a surplus of Sh925 million.
KRA attributes this performance to the successful integration of betting companies into the KRA tax system.
This integration has streamlined the process of tax remittance from the sector and has significantly boosted revenue collection.
In October of the previous year, the agency established a connection between its systems and those of the betting companies.
This integration has provided greater visibility into the revenue generated by these firms and has enabled real-time tax collection.
Simiyu notes that the decelerated domestic economic growth was due to the adverse impact of multiple shocks that affected the economy, including prolonged drought, and international conflicts that disrupted the supply chain among others.
This is the second year in a row that KRA has surpassed the two trillion mark.
The collection, the authority says, signifies a performance rate of 95.3 per cent against the target.
Simiyu further states that the exchequer revenue grew by 6.9 per cent translating to a performance rate of 95.1 per cent against the target.
This was made possible by the addition of a total of 940,483 new taxpayers to the tax bracket in the financial year.
KRA's Tax Base Expansion Programme played a significant role in this achievement, resulting in the collection of Sh14.65 billion in revenue.
This program involved initiatives such as recruiting landlords to comply with the Monthly Rental Income (MRI) obligation and implementing the Block Management System (BMS) to identify potential taxpayers.
Furthermore, domestic VAT experienced a growth of 12.7 percent, amounting to Sh272.45 billion.
KRA attributes this increase to the implementation of the Electronic Tax Invoice Management System (eTIMs) in February of the same year, which proved instrumental in boosting revenue collection.
The taxman is now looking to collect Sh2.768 trillion by the end of the financial year 2023/2024 and surpass the Sh3 trillion mark by 2024/2025.
“KRA is confident that it will achieve this target and enable the government finance its Bottom-Up Economic Transformation Agenda (BETA) and sustain the country’s economy,” Simiyu added.
Exchequer revenue constitutes all the mainstream government revenues which are taxes on international trade and transactions, excise taxes, taxes on income, profits and capital gains, taxes on goods and services, and property taxes.
