The Kenya Revenue Authority (KRA) has for the first time in eight years surpassed its revenue targets managing to beat the prevailing tough times due to the pandemic.

The last time KRA surpassed its targets was in the 2013/14 financial year.

In the FY 2020-2021 (July 2020 - June 2021), KRA’s revenue collection reached a new record of Sh1.669 trillion compared to Sh1.607 trillion collected in the FY 2019-2020.

The FY 2020-2021 revenue target set in the 2021 Budget Policy Statement was Sh1.652 trillion, which the taxman managed to surpass by a surplus of Sh16.808 Billion.

The record amount represents a 101 per cent performance rate and revenue growth of 3.9 per cent compared to the previous Financial Year.

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KRA Commissioner General Githii Mburu says the performance was consistent with the prevailing economic indicators, especially the projected GDP growth of 0.6 per cent in 2020.

Mburu said during the financial year, KRA also recorded a milestone after collected revenue more than doubled in the last decade from Sh707 billion in FY 2011-2012 to Sh1.669 trillion in FY 2020-2021, which accounted for a growth of 136 per cent in the last 10 years.

In the period under review, KRA’s revenue grew by 2.3 per cent with a collection of Sh1.544 trillion compared to Sh1.510 trillion collected in FY 2019-2020 representing a performance rate of 100.9 per cent against the target of Sh1.530 Trillion.

Customs and Domestic Taxes Performance

The Domestic Taxes Department collected Sh1.039 trillion during the FY, while Customs and Border Control collected Sh624.77 billion, and recording a surplus of Sh18.248 Billion.

Petroleum taxes totaled Sh226.680 billion with a surplus of Sh12.252 billion, while non-oil revenue grew by 16.4 per cent to Sh398.089 billion against a target of Sh5.996 billion.

Performance of Key Tax Heads

Corporation Tax recorded a growth of 3.7 percent in FY 2020-2021 due to increased remittance from Energy, Agriculture and Construction sectors.

PAYE declined by 9.3 per cent in FY 2020-2021, a drop from a 2 per cent average growth recorded during the same period last year due to reduce employment rate due to Covid-19.

It was also affected by the reduction of the top PAYE rate from 30 per cent to 25 per cent and a 100 per cent tax relief for persons earning below Sh24,000 per month.

Withholding Tax experienced a strangled growth of 3.8 per cent in FY 2020-2021 from an average growth of 18.2 per cent recorded last year due to adverse effects of Coronavirus.

Domestic Excise grew by 12 per cent compared to a decline of 6.4 per cent last year, while

Domestic VAT declined by 7.9 per cent owing to business turnover decline in the pandemic as well as reduction of VAT from 16 to 14 per cent.

Key revenue drivers

KRA says it surpassed its revenue targets by enhancing compliance enforcement efforts and implementing new tax measures that ensured non-compliant taxpayers paid their tax due.

Mburu also attributed the good performance to Tax Base Expansion (TBE), including Digital Services Tax, Minimum Tax, and Voluntary Tax Disclosure among others.

The taxman said active taxpayers increased from 3.94 million to 6.1 Million.

Through Alternative Dispute Resolution (ADR), KRA said it managed to unlock Sh31.435 billion in taxes out of 552 cases resolved during the FY 2020-2021.

By enhancing the recovery of tax arrears, the authority mobilised Sh93.7 Billion in the FY 2020-2021 compared to Sh84.7 billion collected in FY 2019/2020.