The Kenya Revenue Authority (KRA) has recorded an above-target revenue performance in the first half of the Financial Year 2021/2022 after collecting KShs. 976.659 billion against a target of KShs. 929.127 billion thanks to higher tax compliance. Patriotic taxpayers keen on facilitating national development allowed KRA to collect a surplus of KShs. 47.532 billion.
KRA also surpassed both its exchequer revenue and overall revenue targets in the last five months. (From August to December). Specifically, KRA surpassed both the overall and exchequer targets in December 2021 by KShs 10.152 Billion and KShs 8.257 Billion respectively.
During the first half of the Financial Year, Customs revenue sustained its excellent performance after collecting KShs. 355.787 Billion against a target of KShs. 322.737 Billion reflecting a revenue surplus of KShs. 33.050 Billion. The Customs revenue recorded growth of 19.5 per cent in the period under review.
KRA attributes Customs revenue performance to 25.4 per cent growth in trade taxes and 9.6 per cent growth in petroleum taxes. Trade taxes registered KShs. 233.165 billion against a target of Kshs. 208.411 billion registering a surplus of KShs. 24.754 Billion while Petroleum taxes amounted to KShs. 122.623 Billion against a target of KShs. 114.326 Billion posting a surplus of KShs. 8.296 Billion.
Domestic Taxes performance improved, with a 30.8 percent growth compared to a similar period last year. The Domestic revenue collection was at KShs. 618.312 Billion against a target of KShs. 603.870 Billion. This translates to a surplus of KShs. 14.442 Billion and a performance rate of 102.4 percent.
Pay As You Earn (P.A.YE) registered a performance rate of 105.7 per cent in the first half after a collection of KShs. 221.328 Billion against a target of KShs. 209.339 Billion resulting to a surplus of KShs. 11.989 Billion. The performance was mainly driven by gradual growth in employment and the emanating economic recovery.
The Value Added Tax (VAT) collections amounted to KShs. 121.044 Billion against a target of KShs. 119.543 Billion resulting to a surplus of KShs. 1.501 Billion and recording a growth of 40.2 per cent. The good performance was primarily attributable to enhanced compliance efforts by the Authority and economic recovery. Corporation tax collection stood at KShs. 107.407 Billion which is a growth of 17.3 per cent over the half year. This performance was driven by increased remittance from, Agriculture, Manufacturing, Financial, Wholesale & retail and Transport sectors.
The excellent revenue performance has been enhanced by sustained implementation of key strategies as enshrined in KRA’s 8th Corporate Plan. Some of the strategies include extensive use of data and intelligence to unearth unpaid taxes, use of technology to simplify tax processes, taxpayer engagements and education, customer support programmes; which have led to improved voluntary compliance and tax base expansion which is aimed at on boarding taxpayers previously not paying taxes.
Strengthening integrity measures has also contributed to the continued realization of set revenue collection objectives. This is because revenue collection can never thrive alongside interferences, which may present themselves in the form of counterfeiting and fake licenses and permits, any form of collusion, cartels and syndicates or any form of interference from external stakeholders. The ability to deliver excellent customer service, enforce revenue collection laws effectively and collect the proper amount of revenue is undermined by any lapse in the integrity of the officers charged with the responsibility or the customers. For these reasons, KRA prioritized support of the initiatives by the government in the fight against corruption. These include creating awareness among staff on the Code of Conduct formulated to help them understand the standards of personal behaviour required to maintain as they perform their duties, lifestyle audits, vetting and background checks on new staff as well as disciplinary measures where necessary.
Other strategies include enhanced active surveillance and enforcement operations which have been reinforced by collaboration with the multi-agency team under the whole of Government approach in the fight against economic crimes. The improved staff productivity and high performance culture has also enhanced revenue collection. This follows the implementation of a robust internal performance management culture by the A authority.
Further, the introduction of Voluntary Tax Disclosure Program (VTDP), M-service App and iWhistle have contributed to increased revenue collection. The Voluntary Tax Disclosure Programme allows a person to disclose to the Kenya Revenue Authority (KRA) tax liabilities that were previously undeclared and enjoy full or partial relief of penalties and interest on the tax disclosed under the programme. It was introduced vide the Finance Act, 2020 and commenced on 1st January 2021 and shall run for three years to 31st December 2023. The disclosures eligible under this programme will be for tax periods of up to 5 years prior to 1st July 2020. This is from 1st July 2015 to 30th June 2020. Under this program, KShs. 5.9 billion taxes were collected from 6,690 applications. A total of 13,918 applications were made for disclosure and waivers.
Additionally, KRA has also employed technological strategies to assist seal revenue loopholes. The web-based system, iWhistle where the public can unanimously report corruption to KRA has enabled KRA to gather corruption and tax evasion related information from the public, while concealing their anonymity. M-Service App on its part has enhanced compliance by simplifying payment and filing of tax. The App allows taxpayers to easily register, pay and file tax returns for Monthly Rental Income (MRI) and for Turnover Tax (TOT) obligations. Taxpayers are also able to register for PIN, both Kenyan and Alien citizenship as well as perform checks on PIN, PRN, TCC and Staff checker.
Finally, KRA has progressively enhanced the iTax system for a better user experience. For instance, iTax has been enriched to include an auto-populated return for taxpayers with employment income as the only source of income. As a result, over 5.5 million taxpayers filed their tax returns for the year 2020. More taxpayers are expected to file their tax returns for 2021 and for any other previous years between 1st January and 30th June 2022. Penalty for late filing of annual returns for Income Tax Individuals is KShs. 2000 or 5% of tax due whichever is higher, while Income Tax for Non-Individual is KShs. 20,000 or 5% of tax due whichever is higher.
KRA appreciates compliant taxpayers for their contribution towards furthering Kenya’s economic sustainability through filing and paying their fair share of taxes.