This archive report was first published on 23 October 2019.
Kenya Revenue Authority (KRA) has reported a significant increase in net revenue collections, rising by 13.1 percent to Ksh.372.3 billion in the first three months of the 2019/20 fiscal year.
According to the National Treasury's statement of actual revenues and net exchequer issues, the growth in revenue base was recorded across all three months, with the highest growth in taxes coming in September at 21.4 percent, equivalent to Ksh.150.9 billion.
July and August collections stood at Ksh.113.9 billion and Ksh.107.5 billion, respectively.
The improved collection is attributed to increased surveillance on compliance, with KRA deploying a combination of tax corrective measures, including linking taxpayer accounts with third-party sources such as Kenya Power billing systems and mobile money accounts.
These innovative oversight solutions have already paid off, with an estimated 30 percent of 2018/19 collections leveraged on data.
At the same time, KRA has stepped up its crackdown on tax evaders, with tens of business operators summoned and subsequently prosecuted for denying key taxes to the taxman.
Recoveries from tax avoidance improved by 60 percent in the 2018/19 fiscal year to Ksh.8.53 billion, following court rulings on 222 individual taxes.
KRA expects recoveries in the year to be aided by the increased scrutiny of taxpayer accounts, with the aim of netting 600 new evaders by the close of the financial year in June 2020.
However, the continued deterioration of the macro-economic environment may prove to be KRA's largest challenge in meeting targets, as the Kenyan economy shifts towards lower tax contributory segments.
The share of the higher-yielding manufacturing sector to Gross Domestic Product has eased from 10 to 7.7 percent in the last five years, while that of agriculture has picked up to 34.2 percent.
As a result, KRA is expected to raise a projected Ksh.1.81 trillion by the end of June next year, amidst economic challenges.
The three-month collections by KRA are expected to be appraised by Treasury's Quarterly Economic & Budget Review, set for publishing in mid-November.
