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KRA Collection Hits Eight Year High of Kes 1.67 Trillion in FY2020/21

The Kenya Revenue Authority(KRA) tax collection reached an eight-year high of Kes 1.669 Trillion during the financial year 2020/21 compared to kes 1.607 Trillion collected over a similar period in the previous financial year.

KRA has attributed the good performance to initiatives introduced to enhance revenue collection and introduction of new taxes such as Digital Services Tax, Minimum Tax, and Voluntary Tax Disclosure, among others.

The authority had targeted a total of Kes 1.652 Trillion as reflected in the 2021 Budget Policy Statement, which KRA surpassed with a surplus of Kshs. 16.808 Billion. This represents a performance rate of 101% and revenue growth of 3.9% compared to last Financial Year. This performance is consistent with the prevailing economic indicators, especially the projected GDP growth of 0.6% in 2020.

In a statement released by the authority, KRA also revealed they recorded a milestone after revenue collection more than doubled in the last 10 years from kes. 707 billion in FY 2011/12 to Kes. 1.669 Trillion in FY 2020/21, representing a growth of 136% in the last ten years.

In the period under review, the exchequer revenue also grew by 2.3% with a collection of Kes. 1.544 Trillion compared to Kes. 1.510 Trillion collected in FY 2019/20. This represents a performance rate of 100.9% against the target of Kes. 1.530 Trillion.

The performance of Kes. 1,544 Trillion is before accounting for Kes. 18.5 Billion that the Treasury has undertaken to pay on behalf of taxpayers for various reasons, including economic hardship.

KRA Customs and Domestic Taxes Performance

The Domestic Taxes Department (DTD) collected Kes. 1.039 Trillion during the financial year, translating to a performance rate of 99.8%, while Customs and Border Control (C&BC) collected Kes. 624.77 Billion surpassing its target of Kes. 606 Billion representing a performance rate of 103.0% and recording a surplus of Kes. 18.248 Billion.

Petroleum taxes amounted to Kes. 226.680 Billion posting a growth of 34.5% and a surplus of Kes. 12.252 Billion against the target, while Non-Oil revenue recorded a growth of 16.4%, with collections amounting to Kes. 398.089 Billion, which was above target by Kes. 5.996 Billion.

Corporation Tax recorded a growth of 3.7% in 2020/21 due to increased collections from the construction, energy and agriculture sectors. This is against a reduction in the corporate tax rate from 30% to 25% in H1.

The Pay as You Earn(PAYE) tax collected declined by 9.3% in the 2020/21 financial year due to measures by private firms to scale down due to COVID-19 pandemic effects.

A reduction in the top PAYE rate to 25% from 30% also affected the performance of this tax head and a 100% tax relief for persons earning below Kes 24 000 per month.

Withholding Tax recorded a growth of 3.8% in 2020/21 from 18.2 the prior year due to a depressed economy due to the impact of the COVID-19 pandemic.

Domestic Excise recorded a growth of 12.0% compared to 6.4% the year prior due to the re-opening of the economy and extended opening hours for restaurants and bars.

Domestic VAT collections fell by 7.9% due to a decline in turnover of many firms affected by COVID-19 effects.

The decline was also attributed to a reduction of the VAT rate from 16% to 14%.

The Authority has announced that its 8th Corporate Plan targets to collect Kes. 6.831 trillion by the end of Financial Year 2023/2024 with taxpayers’ support, the projected economic recovery of 6.6 % in 2021, progressive tax policy frameworks, and a robust tax compliance mechanism.

Read also; KRA Records 23.9% Revenue Collection for April.