This archive report was first published on 24 August 2020.
The COVID-19 pandemic has had a devastating impact on Kenya's tax revenue, with the country losing Sh71.5 billion in taxes in the first five months since the start of the pandemic.
According to the latest official data, the Kenya Revenue Authority (KRA) collected Sh575.9 billion from taxpayers between March and July, a drop of 11% compared to the Sh647.4 billion collected in the same period last year.
The Value Added Tax (VAT) recorded the worst performance, with the Exchequer collecting Sh36 billion less between April and June from sales of various goods and services compared to the same period last year.
June was KRA's worst month, with the tax authority registering a drop of Sh27.4 billion from Sh150.9 billion it got in the same month last year.
Githii Mburu, the KRA Commissioner General, attributed the decline in tax collection to the COVID-19 pandemic, which saw business turnovers decline, and the reduction of VAT rate from 16% to 14%, which had an adverse effect on the tax head's performance.
Between April and June, KRA collected Sh78.1 billion in VAT, compared to Sh114.1 billion collected in the same month in 2019, due to muted demand for goods and services arising from the containment measures.
Taxes paid by permanent employees - pay-as-you-earn (PAYE) - reduced by Sh11 billion between April and June, with KRA collecting Sh88.6 billion in the three months compared to Sh98.7 billion collected in the same period last year.
The government also took a huge tax hit between April and June as bars and other entertainment venues were shut to contain the spread of the coronavirus disease, resulting in a loss of Sh16.8 billion in excise taxes.
Further, the move to waive fees on mobile banking denied the government another critical source of excise taxes, with the Exchequer receiving Sh35.7 billion in excise duty in the fourth quarter of the 2019/20 financial year, a drop from Sh52.5 billion collected over a similar period last year.
