KNAIROBI, Kenya, Jul 3 – The Kenya Revenue Authority (KRA) filed a record Sh1.7 trillion revenue collection in the 2020/2021 financial year surpassing the Sh1.6 trillion it collected in 2019/2020.
KRA Commissioner Githii Mburu Saturday said the agency surpassed its target collection for the first time in 8 years, by Sh16.08 billion. The target had been set at Sh1.65 trillion as stated in the 2021 Budget Policy Statement.
“The FY 2020/2021 revenue target as reflected in the 2021 Budget Policy Statement was Sh1.652 trillion which KRA surpassed with a surplus of Sh16.808 billion. This represents a performance rate of 101 per cent and revenue growth of 3.9 per cent compared to the last Financial Year. This performance is consistent with the prevailing economic indicators, especially the projected GDP growth of 0.6 per cent in 2020,” said Mburu.
Collections from domestic excise posted a growth of 12 per cent, compared to a decline of 6.4 per cent, recorded in the preceding financial year. The growth was supported by the gradual reopening of the economy and extended operating hours for bars and restaurants amid disruptions triggered by COVID-19.
Domestic VAT performance however recorded a decline of 7.9 per cent primarily affected by the COVID-19 pandemic which saw business turnovers decline.
The decline was also triggered by the reduction of the VAT rate from 16 to 14 per cent.
At the same time, withholding tax recorded a growth of 3.8 per cent in FY 2020/21, which is a drop from average growth of 18.2 per cent recorded in the previous year.
The performance was negatively impacted by depressed economic growth due to the impact of the COVID-19 pandemic, the taxman said without disclosing the exact figures.
Corporation tax grew by 3. 7 per cent, with key sectors meeting or exceeding their targets.
Energy, Agriculture, and construction sectors for example posted a growth of 22.7, 33.1 and 31.9 per cent respectively.
Payroll taxes, however, experienced a decline of 9.3 per cent with the depressed performance attributed to a reduction in the employment rate emanating from measures taken by mainly private firms to reduce operating costs as a result of the COVID-19 pandemic.
“The tax head was also affected by the reduction of the top PAYE rate from 30 to 25 and a 100percent tax relief for persons earning below Sh24, 000 per month,” added Mburu.
Besides a tough business environment occasioned by the adverse impact of the outbreak of coronavirus disease, KRA tax collection boost has further been attributed to the implementation of several revenue enhancement measures such as nabbing tax cheats.
Adjustments made in order to widen its tax base through the Digital Services Tax, Minimum Tax, and Voluntary Tax Disclosure saw active taxpayers rise from 3.94 million to 6.1 million, further boosted revenue collection in years.
Consequently, the introduction of Alternative Dispute Resolution (ADR) that ensured, faster, objective and efficient resolution of tax disputes, KRA unlocked Sh31.435 billion in taxes out of 552 cases resolved in the financial year.
Under the 2021/2022 fiscal year, KRA is expected to collect at least raise Sh1.8 trillion up from a target of Sh1.6 trillion set in 2020.