KRA Misses October Revenue Targets For Domestic VAT And Excise Duty

The Kenya Revenue Authority (KRA) reported shortfalls in revenue collection for Domestic VAT, Excise Duty Domestic, and non-oil taxes for October this year.

Domestic VAT fell short by Sh2.3 billion, with major sectors like electricity, oil and gas, finance, wholesale trade, and transport experiencing a 26.3 percent drop in remittances.

These sectors represent around 33percent of the typical domestic VAT revenue. Additionally, turnover sales for these sectors decreased by 14.7 percent, while input levels only grew by 0.5 percent.

The performance was also impacted as taxpayers utilized credits from previous months, reducing the tax head by Sh738 million.

Excise Duty Domestic saw a deficit of Sh573 million, affected by reduced remittances from manufacturers of beer, bottled water, tobacco, and soft drinks, which dropped by 2.3 percent, 7.9 percent, 6.6 percent, and 12.2 percent, respectively.

This decline was linked to reduced product deliveries in these categories. Similarly, Excise Duty on money transfers recorded a shortfall of Sh728 million, driven by a 10.6 percent decrease in remittances from banks due to lower transaction values.

Non-oil tax collections also underperformed, posting a deficit of Sh2.875 billion with an overall performance rate of 93.7 percent. Specific shortfalls included import duty, excise duty, VAT, and the Import Declaration Fee (IDF) on ordinary imports, which fell by Sh266 million, Sh814 million, Sh2.252 billion, and Sh405 million, respectively.

Despite these challenges, KRA managed to surpass its overall October revenue target by Sh6.8 billion. The authority also exceeded its exchequer target by over Sh200 million, reaching 100 percent of the goal.

Also Read: KRA Exceeds October Revenue Collection Targets By Sh200 Million

Customs and Border Control (C&BC) registered Sh73.165 billion in revenue, the highest monthly C&BC collection ever recorded by KRA, breaking the previous record of Sh72.809 billion from August 2023.

A notable highlight was oil taxes, which delivered a surplus of Sh3.816 billion.

This achievement was bolstered by the Road Maintenance Levy (RML), bringing in Sh4.289 billion, excise tax on oil at Sh198 million, the Petroleum Regulatory Levy (PRL) at Sh187 million, and the Railway Development Levy (RDL) on oil at Sh92 million.

KRA attributed the surplus to a 30.7 percent increase in oil volumes, with petrol rising by 62.3 percent, diesel by 4.2 percent, and other oil products by 46.1 percent.

The RML’s performance was further strengthened by a levy increase from Sh18 to Sh25 per liter, effective since July 2024.

The Air Passenger Service Charge also surpassed expectations by Sh131 million, spurred by a 5.1 percent increase in visitor arrivals at Jomo Kenyatta International Airport (JKIA) and Moi International Airport (MIA) from January to August 2024.

Other revenue sources exceeded targets, with the RDL on non-oil products and Transit Road Toll contributing Sh550 million and Sh61 million, respectively. Withholding tax was Sh2.593 billion above target, buoyed by strong growth from both private and public sectors, which rose by 27.4% and 41.9%, respectively.

PAYE collections outperformed by Sh689 million, driven by significant remittances from the public sector, while Corporation Tax recorded a surplus of Sh155 million, thanks to robust payments from sectors like electricity, manufacturing, retail, and real estate.

Betting and Excise Taxes on betting services exceeded their targets by Sh16 million and Sh50 million, respectively, with high betting activity linked to major European football leagues.

Overall, KRA’s agency revenue was Sh1.863 billion over target, with the Housing Levy alone contributing Sh1.826 billion. The Communications Authority of Kenya (CAK), Kenya Civil Aviation Authority (KCAA), Insurance Regulatory Authority (IRA), and Kenya Maritime Authority (KMA) also contributed surplus funds totaling Sh5.128 billion.