Kenya’s tax authority has announced a significant increase in revenue collection for the 2023/2024 financial year, despite facing multiple economic headwinds. The Kenya Revenue Authority (KRA) reported a total collection of KES 2.407 trillion, representing an 11.1% growth from the previous year’s KES 2.166 trillion.
The improved performance comes against a backdrop of economic challenges, including currency depreciation and supply chain disruptions. “The year under review was characterized by multiple economic shocks that included depreciation of the Kenya Shilling against the US Dollar, rising bank lending rates and international conflicts that disrupted supply chains, among others,” the KRA stated in its annual report.
Despite these obstacles, the authority achieved a performance rate of 95.5% against its target. The Exchequer revenue, which forms the bulk of collections, grew by 9.5% to KES 2.223 trillion.
A standout performer in the tax collection matrix was Domestic VAT, which surpassed its target by KES 6.334 billion, collecting KES 314.157 billion. This represents a 15.3% growth compared to the previous year. The KRA attributed this success to the implementation of the Electronic Tax Invoice Management System (eTIMS), stating that it “has enhanced compliance among VAT-registered taxpayers.”
Capital Gains Tax also showed impressive growth, increasing by 49.5% to KES 8.381 billion, exceeding its target by KES 671 million.
However, not all sectors performed equally well. Corporation tax, while growing by 4.9%, fell short of its target with a collection of KES 278.156 billion. The KRA noted declines in key sectors such as Finance & Insurance, Information & Communication, and Manufacturing, citing “reduced profitability reported by taxpayers across these sectors.”
The authority highlighted several strategies that contributed to the overall revenue growth, including leveraging technology, expanding the tax base, and implementing a tax amnesty program. “KRA will increasingly rely on data analytics, Artificial Intelligence (AI), Machine Learning (ML) and Application Programming Interface (API),” the report stated, outlining plans for future technological integration.
The Tax Base Expansion program alone contributed KES 24.62 billion in revenue, with the authority recruiting over 1.2 million additional active taxpayers during the period.
Looking ahead, the KRA announced the implementation of its 9th Corporate Plan, which will span five years instead of the usual three. The plan aims to enhance tax and Customs compliance through process simplification, infrastructure scaling, and human resource optimization.
Despite the positive results, the KRA acknowledged the challenging economic environment and praised taxpayers for their resilience. “As at 30th June, 2024, a total of 8,046,029 tax returns were filed, against a target of 7,187,932. This represents a growth of 26% compared to 6,385,523 tax returns filed last year,” the report noted.
The KRA’s performance reflects a broader economic context, with Kenya’s GDP growth reaching 5.6% in the 2023 calendar year, up from 4.9% in 2022. While inflation remained a concern, averaging 6.22% for the fiscal year, it showed signs of easing in the latter half of the period.
