Home News KRA defies Covid to beat revenue collection target for 2020-21

KRA defies Covid to beat revenue collection target for 2020-21


The implementation of revenue enhancement initiatives and introduction of new tax measures propelled the Kenya Revenue Authority to post a record revenue collection despite Covid-19 effects in 2020-21, a report shows.

The annual revenue performance report released by commissioner general Githii Mburu shows that the taxman defied the global pandemic that continues to take toll on the economy to beat its annual target for the first in eight years.

KRA collected a record Sh1.669 trillion against annual target of Sh1.652 trillion thus surpassing the target by Sh16.808 billion.

“During the year, KRA also recorded a milestone after revenue collection more than doubled in the last 10 years from Sh707 billion in 2011-12 to Sh1.669 trillion in 2020-21 representing a growth of 136 per cent in the last 10 years,” Mburu said in the report.

Customs and domestic taxes netted the highest revenues for the taxman after generating Sh1.039 trillion during the year translating to 99.8 per cent performance rate.

Some Sh624.77 billion was raised by the customs and boarder control departments against a target of Sh606 billion.

Petroleum taxes generated Sh226.680 billion posting a surplus of Sh12.252 billion against its target while non-oil revenue recorded a growth of Sh16.4 per cent.

Corporation tax recorded a growth of 3.7 per cent.

However, collections from PAYE dropped by 9.3 per cent.

“The decline was driven by reduction in employment emanating from measures taken by mainly private firms to reduce operating costs as a result of the Covid-19 pandemic,” Mburu said.

The reduction is also attributed to reduction of PAYE rate from 30 per cent to 25 per cent in eth first half of the fiscal year and 100 per cent tax relief for persons earning below Sh24, 000.

Withholding tax recorded a 3.8 per cent growth, collections from domestic tax grew by 12.0 per cent while domestic VAT declined by 9.7 per cent primarily due to Covid 19.

Mburu attributed the improved collection to a number of revenue enhancement initiative and new tax measures introduced by the Authority to boost performance.

The performance is also attributed to the expansion of tax base.

Through the initiative, KRA recruited more taxpayers through the newly implemented taxes including digital services tax, minimum tax and voluntary tax disclosures.

“Over the seventh corporate plan period active taxpayers increased from 3.94 million to 6.1 million,” Mburu said.

The introduction of alternative dispute resolution mechanism also enabled the taxpayers to come forward to seek amicable solutions to disputes with the Authority.

“With the main objective being to ensure faster, objective and efficient resolution of tax disputes, ADR enabled KRA to unlock Sh31.435 billion in taxes out of 552 cases resolved during the 2020-21 financial year,” the commissioner general divulged.

The enhanced recovery of tax arrears also saw the taxman mobilise Sh93.7 billion during the year under review compared to Sh84.7 billion collected the previous year.

Mburu added the Authority’s deliberate decision to invest in technology over the years was also instrumental during the peak of the Covid 19 pandemic.

For instance, the automation of KRA processes enabled the authority to improve taxpayers’ services thus boosting collections.

“KRA also entrenched a performance management culture which enhanced accountability and productivity of the staff, thus driving the strong financial year performance,” Mburu said.

The Authority also intensified its fight tax evasion to ensure no revenue is lost.

“The Authority’s eight corporate plan targets to collect Sh6.831 trillion by the end of the end of 2023-24,” Mburu said.

The commissioner general exuded confidence that with the support of the taxpayers, the projects economic recovery of 6.6 per cent, progressive tax policy frameworks and a robust compliance mechanism, the Authority will achieve its target.

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