KRA misses Treasury’s revenue target by  KSh50B FY2016/17

The Kenya Revenue Authority (KRA) has missed its target by KSh 50 billion (9 percent) collecting KSh1.365 trillion in the 2016/2017 fiscal year compared to the target of KSh1.415 trillion.

The data released by the taxman showed the collection rose 13.8 percent from the previous year but still fell short of the target set by the government of 1.5 trillion shillings. 

“In comparison with past experience, tax performance for 2016/17 has not recorded noticeable adverse impact in the period leading up to the General Election,” said Commissioner General John Njiraini in a statement.

The improved revenue collection was on account of improvements in revenue administration from the i-Tax and excise goods management systems (EGMS),  new excise tax measures and the re-introduction of VAT withholding. 

Collections have grown by an average of 14.3 percent over the last five years however, the lowest  growth was recorded in manufacturing and electrical power generation

Customs recorded strong growth at 14.9 percent compared to a four-year average of 14.7 percent, attributed to tighter enforcement measures.

“Customs performance, however, continued to be adversely impacted by sluggish import growth with container volumes in FY2016/17 growing by 6.4 percent in comparison with FY2015/16. The reduced import statistics are an East Africa wide phenomenon, with all EAC revenue authorities reporting sluggish Customs performance for 2016/17,” KRA Commissioner General John Njiraini.

READ: 50pc of Taxpayers Failed to Meet KRA’s Deadline on Filing Returns 

Corporation tax rose  by 18.2 percent while Domestic Excise tax went up by 13.3 percent.
Pay As You Earn (PAYE) recorded depressed growth of 7.9 percent compared to the previous four-year average of 12.5 percent attributed to expanded tax relief granted in January 2017 through the widening of tax bands as well as wage and employment freezes in the public sector and layoffs in key private sectors including the banking sector.

“PAYE recorded growth of 7.9 per cent compared to the previous four-year average of 12.5 per cent, with the depressed performance partly attributed to expanded tax relief granted in January 2017 through widening of tax bands,” said Mr Njiraini in a statement.

He says tax Performance for FY 2016/17 conveys optimism for fiscal stabilisation and potentially for future business prospects, given the robust performance in many tax areas.
KRA is working on an Integrated Customs Management System which is geared towards replacing the Simba System and is presently under roll out with its application already under way for Air Cargo.

The full roll out for Sea Cargo will be done by July 31st, 2017.

Moreover, the Authority has also awarded the contract for the implementation of the Integrated Scanner Management Solution and work is set to commence in August with completion timed for December 2017.

This initiative aims to interconnect all cargo scanners to a Central Command and Control Centre, from where enforcement decisions will be coordinated.

“We remain committed to making the taxpaying experience better for everyone who seeks to interact with us through provision of a courteous and professional service. This we shall do through continuing investment in modern technology to support enhanced efficiency and the re-training of our staff towards customer consciousness,” he affirmed.

Kenya’s Tax-to-GDP ratio currently stands at 19.3 percent, which is the 2nd highest in non-oil economies within Africa, and the highest within the EAC where the average stands at 14.8 percent.

“The 2016/17 performance compares well with prevailing economic indicators including a Gross Domestic Product growth of 5.5 per cent and average inflation rate of 8.1 per cent, the latter which mainly affected food items exempt from taxation,”he said.