KRA Collects Record KES 2.84 Trillion as Key Sectors Drive Strongest Revenue Growth in Years

Revenue collection for the Financial Year 2025/2026 registered a robust double-digit growth of 10.6%, significantly outperforming the 6.8% growth recorded in the previous financial year.

The Kenya Revenue Authority (KRA) collected KES 2.844 trillion, representing an increase of KES 272.953 billion over the KES 2.572 trillion collected in FY 2024/2025. The strong performance underscores sustained growth in domestic revenue mobilisation despite a challenging operating environment.

Five key sectors of the economy accounted for approximately 62.0% of total revenue. Manufacturing, Energy, Financial & Insurance, Information & Communication, and Wholesale & Retail Trade remained the country’s leading drivers of government revenue. These sectors that account for 27.4% of overall nominal GDP (raw economic metric not adjusted for inflation or deflation) recorded an aggregate revenue growth of 8.0%.

In particular, the Energy Sector registered a 9.1% revenue growth with a collection of KES 445 Billion, largely driven by good performance of Customs oil taxes. The sector contributed 15.6% of overall revenue that KRA collected for the FY 2025/2026.

The manufacturing sector recorded a revenue growth of 9.2% after registering collections amounting to KES 462 Billion, compared with KES 423 Billion collected in the previous FY. The key taxes accounting for 74.6% of this collection are Value Added Tax (VAT), Pay As You Earn (PAYE), Excise, and Corporation Tax. The sector contributed 16.2% of the overall revenue collected for the FY 2025/2026. Inputs to the sector in terms of raw material imports (food & beverages and industrial non-food supplies) accounted for 49.0% of the overall import value in the FY 2025/2026.

The Financial & Insurance Sector accounted for 11.3% of KRA revenue for the FY 2025/2026 with collections of KES 320 Billion, compared with KES 311 Billion collected in the previous FY. Corporation Tax accounted for 34.8% of collections in the sector, with a further 47.1% attributable to Withholding Income Tax and PAYE.

On the other hand, revenue from the Information & Communication Technology sector grew by 7.9% after KRA collected KES 248 Billion in the FY 2025/2026, compared with KES 230 Billion collected in the previous FY. The sector’s contribution to the total revenue was 8.7%. Significant revenue contributors for the sector included Excise (Airtime & Financial Services), Corporation Tax, Domestic VAT and PAYE among others.

The Wholesale & Retail Trade sector accounted for 10.1% of the total revenue collected in FY 2025/2026, yielding KES 288 Billion. This represents a growth of 10.3%, compared to the KES 261 Billion collected in the previous FY.

Revenue Performance for FY 2025/26

Exchequer Revenue

The Exchequer Revenue grew by 10.5% after a collection of KES 2.568 Trillion compared to KES 2.323 Trillion collected in the previous financial year. This translates to a performance rate of 95.2%, against a target of KES 2.698 Trillion.

Agency Revenue

Beyond its core tax collection mandate, KRA also collects various levies and charges on behalf of other government agencies. In FY 2025/26, the Agency Revenue grew by 11.2% after KRA collected KES 276.139 Billion compared to KES 248.276 Billion collected in the previous financial year. This translated to a performance rate of 99.1%, reflecting KRA’s growing capacity to efficiently collect agency levies.

Customs and Domestic Revenue Performance

Customs Revenue recorded a performance rate of 100.8% with a collection of KES 988.780 Billion against a target of KES 980.794 Billion. This translates to a revenue growth of 12.4%, compared to the same period in FY 2024/25. This is attributable to good performance of oil and non-oil revenue streams, which collected KES 370.383 Billion (performance rate of 102.6%) and KES 618.397 Billion (performance rate of 99.8%) respectively.

Domestic Revenues registered a growth of 9.7% after a collection of KES 1.851 Trillion against a target of KES 1.991 Trillion. This translates to a performance rate of 93%.

Performance of Key Tax Heads

Pay As You Earn (PAYE): KRA collected KES 807 Billion from PAYE, signifying a growth of 6.7% and a performance rate of 91.8%. While this is an improvement compared to a growth of 3.3% recorded in FY 2024/25, it is still lower than average growth of 8.5% recorded in FY 2022/23-2023/24. This performance is affected by the shrinking contribution of formal sector employment to overall employment from 15.7% in 2022 down to 15.5% in 2024, and 15.3% in 2025 (Economic Survey 2026).

Domestic VAT: Domestic VAT collection stood at KES 355.255 Billion, reflecting a growth of 5% compared to the previous year. In January to April 2026, gross domestic VAT performance against target averaged at 98.0% with a growth of 15.5%. This was an improvement compared to the performance recorded in the first half of the FY when the tax head recorded an average growth of 8.5% and a performance rate of 92.4% against the target. It is important to note that between May and June 2026, taxpayers within the oil sub-sector accrued substantial refunds following policy change on applicable VAT rate from 16% down to 8%.

Corporation Tax: Corporation Tax has maintained steady growth, with FY 2025/26 recording a 0% growth compared to 9.8% in FY 2024/25 and 4.6% in FY 2023/24. For the period under review, collection stood at KES 347.066 Billion against a target of KES 365.249 Billion. About half (49.4%) of Corporation Tax in FY 2025/26 was collected from five sectors, including ICT, manufacturing, transportation, energy and wholesale. These sectors recorded average growth of 25.0% in instalment remittance, supported by improved profitability by both private and public sector firms. Additionally, remittance from banks grew by 11.1% in FY 2025/26 and accounted for 26.1% of total collections.

Betting Taxes: Excise Tax on betting services surpassed the target after registering a surplus of KES 267 Billion with a performance rate of 115.9%. The tax head collected KES 16.527 Billion against a target of KES 14.261 Billion and registered a growth of 24.9%. Betting Tax and Withholding Tax on betting and gaming also registered respective growths of 20.3% and 59.2%.

Domestic Excise: The tax head recorded a collection of KES 845 Billion in FY 2025/26. Domestic excise from alcoholic beverages (beer, wines & spirits) accounts for 69.3% of overall domestic excise with a further 14.9% being realised from tobacco products.

Significant Economic Presence Tax (SEPT)/Digital Service Tax (DST): Collections for the tax head doubled to KES 1.609 Billion in FY 2025/26 compared to KES 807 Billion collected during the same period in the previous FY. SEPT applies to non-resident persons earning income from services provided through a digital market place in Kenya. The Finance Act 2025 expanded the scope of SEPT to cover income earned through the internet or any electronic network. It further eliminated the threshold of KES 5 Million that was initially in application.

Revenue Mobilisation Strategies

Technology Adoption

KRA continues to leverage modern technology to enhance efficiency, transparency and effectiveness in revenue collection. These innovations are part of KRA’s broader digital transformation and tax modernisation strategy to improve compliance, reduce leakages and enhance taxpayer experience.

Some of the technological milestones that KRA has made include enhancement and expansion of the Electronic Tax Invoice Management System (eTIMS) to strengthen transaction visibility and improve VAT compliance. As at June 2026, a total of 750,915 taxpayers had on-boarded.

In addition, technology has enabled the Authority to build a modern, data-driven tax administration that is efficient, transparent, fair, and responsive to the needs of taxpayers. Through the integration of key systems such as iTax and the Integrated Customs Management System (iCMS), KRA has enhanced visibility of transactions across both domestic and customs operations, strengthening data sharing and compliance monitoring.

This has also facilitated the implementation of initiatives such as pre-populated tax returns, which reduce errors and opportunities for non-compliance by automatically incorporating data from independent third-party sources, including electronic invoicing systems. This has made the filing process more accurate, transparent, and convenient for taxpayers.

There has also been significant progress in sealing of revenue leakage through non-intrusive cargo scanners and AI-powered analytics, which have strengthened detection of illicit trade and non-compliance.

To improve the taxpayer experience, KRA has launched several simplified solutions that have improved compliance. Some of these solutions include pre-populated returns, WhatsApp chatbot, USSD service (*222#), which has made it easier for taxpayers to register, file returns and pay taxes, making compliance faster and user-friendly.

KRA has also rolled out the eCustoms mobile application, which has reduced the cost of compliance among cross-border traders by making clearance processes seamless and user-friendly.

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