KRA Records 11.1 Percent Growth in Revenue Collection for FY 2023-24

The Kenya Revenue Authority recorded a 11.1 per cent growth in revenue collection for the financial year 2023-24.

The Authority said Monday it recorded 11.1 per cent growth from 6.4 per cent in the previous financial year.

This is after KRA collected Sh2.407 trillion compared to Sh2.166 trillion in the previous financial year.

The Authority said the growth translates to a performance rate of 95.5 per cent against the target.

“Revenue mobilization for the financial year 2023/2024 grew by a notable 11.1% up from 6.4 % in the previous financial year, after KRA collected Sh2.407 trillion compared to Sh2.166 Trillion in the previous financial year.  This translates to a performance rate of 95.5% against the target.”

KRA said 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. These factors affected revenue mobilization efforts, KRA said in a statement.

“The Exchequer revenue grew by 9.5% after KRA collected Sh2.223 Trillion compared to Sh2.030 Trillion collected in the previous financial year. This translates to a performance rate of 95.8%.”

According to the Authority, these factors affected revenue mobilisation efforts.

“KRA collects revenue on behalf of other government agencies, mainly at the ports of entry. These include Road Maintenance Levy, Air Passenger Service Charge, Aviation Revenue, Petroleum Development Fund, Petroleum Regulatory Levy, and Housing Levy, amongst others,” the statement read.

The authority said during the financial year ending June 30, 2024, KRA collected agency revenues amounting to Sh184.036 billion, reflecting a growth of 34.9 per cent compared to the last financial year.

KRA added that during the financial year, Domestic Taxes registered a revenue growth of 14.4 per cent after collecting Sh1.611 trillion against a target of Sh1.677 trillion.

This translates to a performance rate of 96.1 per cent.

Customs Revenue recorded a performance rate of 94.6 per cent with a collection of Sh791.368 billion. This translates to a revenue growth of 4.9 per cent compared to the same period in FY 2022-023.

“Despite overall import values increasing by 11.7 per cent, oil and non-oil taxes performance were partly affected by growth in exemption and remissions, which grew by 23.8 per cent, driven by special exemptions accorded to some food commodities,” the statement read.

“These products account for 40.8 per cent of exemptions accorded in the FY 2022-23.”

KRA said the special exemptions were part of the government’s strategies to mitigate against adverse effects of drought and reduce the cost of living.

The Authority further stated that there was low consumption of petroleum products in the country, especially diesel and petrol, which was in part exacerbated by high retail prices for the better part of the year.

KRA said the domestic VAT collection stood at Sh314.157 billion against a target of Sh307.823 billion, reflecting a growth of 15.3 per cent compared to the previous year.

The Authority said Pay As You Earn (P.A.YE) registered a growth of 9.7 per cent after collecting Sh543.186 billion.

The performance was mainly driven by remittances from private firms and the public sector, which grew by 13.4 per cent and 3.7 per cent.

The tax head recorded a growth of 8.1 per cent in FY 2023/24, with a collection of Sh73.624 billion, which translates to a performance rate of 99.6 per cent.

KRA said the performance is attributed to the growth in revenue from manufacturers of soft drinks 12.2 per cent, bottled Water 9.7 per cent, beer 16.2 per cent and Tobacco 1.9 per cent.

“Despite the challenging economic environment, taxpayers exhibited resilience and voluntarily paid their taxes to support the country’s economic transformation” KRA said.

As of June 30, 2024, a total of 8,046,029 tax returns were filed, against a target of 7,187,932.

This represents a growth of 26 per cent compared to the 6,385,523 tax returns filed last year.

The Authority said the revenue growth is attributed to implementation of key strategies as enshrined in KRA’s 8th Corporate Plan.

For instance, KRA has continued to leverage disruptive technology to deliver tools that enable market customized solutions.

“These solutions have highly simplified tax processes, facilitated trade and enhanced voluntary compliance.”

“Going into the future, KRA projects to design and deploy new technology architecture that will create market customized solutions by enabling other stakeholders to integrate with KRA systems.  KRA will increasingly rely on data analytics, Artificial Intelligence (AI), Machine Learning (ML) and Application Programming Interface (API),” the statement added.

It added these technologies will reshape how KRA approachescompliance by modernising tax processes.

The technologies will help improve customer experience, service quality, identify potential tax evasion schemes, and help KRA make informed decisions and formulate data-driven policies.

The statement added the Tax Base Expansion is another factor and aims to on-boardtaxpayers previously not paying taxes. The program enabled KRA to collect Sh24.62 billion inrevenue.

“Some of the initiatives under the TBE include recruitment of landlords under the Monthly Rental Income (MRI) programme through a taxpayer mapping process (Block Management System – BMS). Through the programme, KRA recruited 1,247,543 additional active taxpayers in the period under review.”

Further, through the Tax at Source KRA was able to integrate with other systems, allowing for an almost real-time collection of information and revenue directly at the source.

Some of the initiatives under this programme that KRA has implemented include Electronic Tax Invoice Management System (eTIMS) which has minimised VAT fraud and increased tax revenue.

A total of 280,663 VAT-registered taxpayers onboarded, which led to remittances of Sh314.157 billion.

Also, Integration of Betting and Gaming Companies into KRA tax system gave KRA real-time access to companies in the gaming and betting sector.

The sector registered a growth rate of 26.2% after KRA collected Sh24.269 billion in FY 2023/24 compared to Sh19.224 billion in the previous year from Excise on Betting Services, Withholding tax on winnings from betting and gaming, and Betting tax.

“The collections were from 111 taxpayers that have been on-boarded. The performance is attributed to the integration of the betting companies into the KRA tax system, which has streamlined tax remittances.”

In the period, KRA enhancedcollection from debt programmes on non-compliant taxpayers, collecting a total of Sh103.390 billion in FY 2023/2024.

This performance is attributable to-follow-ups on demand notices and the debt instalment plans agreed upon with taxpayers.

The tax amnesty programme collected Sh43.9 billion after 2,617,111 taxpayers were granted amnesty in the Financial Year 2023/2024.

Trade Facilitation under customs achieved a 40.55% uptake on pre-arrival processing, surpassing the 40% target.

“This achievement underscores KRA’scommitment to efficiency and effectiveness in service delivery. Additionally, the formulation of joint Service Level Agreement (SLAs) for sea clearance cargo among Partner Government Agencies (PGAs) promises to streamline clearance processes, eliminating bottlenecks and enhancing trade facilitation.”

The dispute resolution framework enhanced revenue collection from Alternative Dispute Resolution (ADR), which facilitated the release of Sh21.9 billion for collection from 1,184 concluded cases.

KRA has implemented an anonymous whistle-blowing mechanism through which the public and staff can report tax malpractices.

For the period under review, 883 cases were reported through the iWhistle system. This led to recovery of Sh4.22 billion. During the same period, 255 staff were investigated, 41 lifestyle audits conducted and 2,100 background checks completed.