The Kenya Revenue Authority (KRA) raised 1.562 trillion shillings in revenue since July 2020 missing the annual set target by 16.8 billion shillings, new data has revealed.
According to the National Treasury, this revenue collection is a 98.9 percent improvement in performance by KRA in the year bettering the 97.4 percent the previous year.
The improved tax collections come despite the tough economic situations marred by low revenue remittances as a result of the COVID-19 pandemic.
The collections through July to December 2020 were also affected by the government tax incentives which included reductions in pay as you earn (PAYE), VAT, and corporation tax.
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Despite these challenges, import duty, PAYE, and VAT posted significant improvements of 6 percent, 2.3 percent, and 7.7 percent respectively.
However, excise taxes dropped by 1.7 percent, corporation tax fell by 5.3 percent while non-tax revenues slid by 25.8 percent to 132.5 billion shillings.
Tax collection was the worst hit between November and January with the deficit sitting at 16.7 percent in November.
The reversal of tax relief measures in January 2021 and new tax measures from the 2020 Finance Act including the digital services tax contributed to the recovery recorded in the latter months.
Overall, the cumulative revenue including appropriations from the ministries stood at 1.738 trillion shillings. This figure was shy of expectations by 99.5 billion shillings.
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The ministerial appropriations stood at a poor 176.4 billion shillings missing the prescribed target by 82.7 billion shillings.
Meanwhile, the total expenditure and net lending closed at 2.755 trillion shillings against a target of 2.887 trillion shillings.
The target miss left behind a fiscal deficit of 7.8 percent of GDP, the same as the prior year.
During the current financial year, there’s likely to be a fiscal deficit of 7.5 percent in the current financial year. The Treasury projects it to close out at a lower 3.6 percent in June 2025.
Interestingly, the exchequer ministry’s data shows the Kenyan economy expanded by 9.5 percent in value terms over the 12 months with GDP estimated at 11.169 trillion shillings.
KRA is tasked with collecting 1.776 trillion shillings in the 2021/2022 financial year with total revenues projected at 2.034 trillion shillings.