The Kenya Revenue Authority (KRA) issued a press release highlighting that tax revenues increased by 6.7% on a year-to-year basis to Kshs 2.17 trillion in FY2022/23, up from Kshs 2.03 trillion in the previous year. This marks the second year in a row that KRA has surpassed the Kshs 2 trillion mark, albeit short of its Kshs 2.2 trillion target, translating to a remarkable 95.3% performance rate in tax collection. This impressive growth in revenue collection is indicative of the government’s effective fiscal policies and its commitment to boost economic development.
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During the financial year 2022/23, exchequer revenues, which consist of income tax, excise taxes, and taxes on international trade and transactions, expanded by 6.9% to Kshs 2.03 trillion, up from Kshs 1.90 trillion recorded the previous year. On the other hand, KRA collections on behalf of government agencies grew by 3.7% to 136.39 billion in FY2022/23, up from Kshs 131.52 billion reported in the previous year.
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Domestic tax collections increased by 8.5% to Kshs 1.41 trillion, translating to a performance rate of 95.0% against the collection target of Kshs 1.48 trillion. Customs tax collections, on the other hand, registered a growth of 3.5% to Kshs 754.09 billion over the same period.
Under key tax heads, Excise on Betting was the top performer, recording a strong performance rate of 116.2%, having collected Kshs 6.64 billion against a target of Kshs 5.72 billion, with the FY2022/23 collection representing a 30.0% growth from Kshs 5.11 billion collected in the previous year. The success was attributed to scaled-up revenue collection and the enhanced visibility of revenues generated by betting companies following the integration of KRA systems with theirs back in October 2022.
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Digital Services Tax and VAT on Digital Market Supply also recorded stellar performances, having expanded by 207.9% to collect Kshs 5.33 billion in FY2022/23 compared to the amount collected in the previous year.
Domestic VAT collections grew by 11.3% to Kshs 272.45 in the year under review, up from Kshs 244.79 billion recorded previously. The growth was attributed to enhanced compliance among VAT registered taxpayers following the successful implementation of the Tax Invoice Management System (TIMS).
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Corporation Tax collections were also on an upward trajectory, recording 9.0% year-on-year growth to collect Kshs 263.82 billion in the year under review, representing a 94.2% performance rate against its collection target. The growth was largely driven by remittances from sectors such as Finance and Insurance, Manufacturing, Wholesale and Retail Trade, Information and Communication, and Electricity, Oil, and Gas.
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Pay As You Earn (P.A.Y.E.) also performed well, recording a growth of 7.2% to Kshs 494.98 in the year under review, mainly attributed to the 10.7% growth in remittances from private firms.
Domestic Excise Tax collections remained relatively unchanged, registering a growth of 2.8% to hit collections of Kshs 68.2 in FY2022/23 and recording a 91.4% performance rate against the target collection.
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Following the relative success in tax collection registered in FY2022/23, KRA has set a collection target of Kshs 2.77 trillion in the current financial year 2023/24 and will breach the Kshs 3 trillion mark by FY 2024/25. To achieve the targets, the “Taxman” has set in motion a number of key tax policies and tax administrative measures, including the implementation of the National Tax Policy and the Medium-Term Revenue Strategy (MTRS) for the period FY 2023/24 – 2026/27.
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