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February 21, 2018

KRA closer to meeting target as revenue collected grows

KRA commissioner general John Njiraini during a tax summit in Nairobi on October 17, 2016 /ENOS TECHE
KRA commissioner general John Njiraini during a tax summit in Nairobi on October 17, 2016 /ENOS TECHE

The Kenya Revenue Authority is likely to hit its revenue target for the current financial year which is projected at Sh1.49 trillion. The overall revenue collected for the first half of the 2017-18 financial year grew by Sh62.5billion to Sh712.2 billion, a 9.6 per cent growth from the Sh649.7 billion collected in the same period over the last financial year.

The authority aims to collect Sh798.84 billion in the second half. In a statement, KRA commissioner general John Njiraini attributed the growth to better compliance enhancement efforts largely with the help of technology and reforms.

 tax assessment

The iTax system, which provides data collected about business transactions, including firms doing business with government and more than 6,500 of Kenya’s largest corporate entities, has been useful.

“This data is now being mined and used to issue tax assessments against previously nonregistered persons or registered taxpayers whose filings materially differ from the declarations they submit to the KRA. To date, assessments totalling Sh29.6 billion have been issued and collection efforts are in progress,” Njiraini said.

In addition to this, VAT recorded growth of 7.5 per cent, mainly driven by the expansion of withholding VAT framework which now encompasses almost 7,000 agents. Sectors that exhibited growth include telecommunications ( 16.1 per cent), transport ( 40 per cent) and construction ( 124 per cent), while depressed growth was recorded in agriculture, manufacturing, construction and mining sectors. The energy sector also performed poorly, a fact mainly attributed to high investment deductions.

Corporation tax grew by 7.2 per cent with the key banking sector recording growth of 11.1 per cent. Profit performance within the sector was mixed with several Tier 1 banks issuing profit warnings whereas a sizeable proportion of Tier 3 banks recorded losses.

 election

PAYE recorded growth of 9.2 per cent driven by improved compliance within the Public Sector following the establishment of a dedicated compliance programme within KRA.

PAYE from large private firms recorded subdued growth of 2.4 per cent with key sectors such as construction, wholesale retail, agriculture and transport collectively declining by 5.8 per cent.

Domestic Excise Tax recorded the worst performance declining 9 per cent during the review period compared to an annual average growth of 16 per cent over the previous three years. Remittances from the main excise sectors of beer, tobacco and spirits, declined 8.4 per cent attributed largely to a drop in volumes; 16 per cent for tobacco, 11.2 per cent for spirits and 16.3 per cent for beer.

Industry analysts term the performance unusual given what would otherwise have been a good season given election-related consumption. There are indications of recovery with January 2018 figures showing reversal of trends with recorded growth of 6.8 per cent and 1.8 per cent for alcohol and tobacco respectively.

Customs recorded overall growth of 7.7 per cent with non-oil collections, which account for about 70 per cent of revenue growing at 8.1 per cent. 

 

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