Kenya: Revenue Collection in January Rises Drastically to Signal Economic Resurgence

Nairobi — The Kenya Revenue Authority (KRA) has commenced the calendar year 2021 on a high after recording an improved performance rate of 102.6 percent to surpass its January revenue collection target by Sh3.53 billion.

Despite the challenging economic environment, KRA collected Sh142 billion against a target of Sh138 billion representing 6.7 percent growth over the same period last year. This was the second month running that KRA posted an improved and above target performance since the outbreak of Covid-19.

KRA Director-General Githii Mburu in a statement says the positive performance is widely accredited to the resurgence of the economy. According to the Quarterly Gross Domestic Product Report by Kenya National Bureau of Statistics, the economy contracted by 1.1 percent in the third quarter of 2020 compared to a contraction of 5.5 percent in the second quarter of 2020. In addition, the relaxation of the stringent Covid-19 containment measures, the implementation of the Post Covid-19 Economic Recovery strategy 2020-2022 by the government and the sustained implementation of enhanced compliance efforts by KRA in the month of January 2021 have continued to drive this performance.

In January, the Customs & Border Control (C&BC) Department continued with its excellent performance after collecting Sh54.919 billion reflecting a growth of 9.7 percent and registering a revenue surplus of Sh6.053 billion.

The customs revenue was achieved through a sustained daily average of non- oil revenue at Sh1.727 billion compared to Sh1.744 billion in December 2020, which was the highest ever daily average collection for customs revenue. Exemptions and remissions in Customs declined by 4.8 percent, positively impacting the revenue base by Sh283 million.

The Domestic Taxes also registered improved performance at 97.1 percent , the best progress since the start of the Covid-19 pandemic. The Domestic Taxes recorded an improved growth of 5.0 percent in January 2021 from a decline of 10.4 percent in December 2020.

During the month under review, Excise Domestic Taxes recorded a growth of 42.8 percent after collecting a surplus of Sh3.422 billion while Withholding Tax surpassed the target by Sh396 million reflecting a growth of 8.2 percent. Pay As You Earn (PAYE) taxes recorded a performance at 98.6 percent.

Corporation Taxes recorded a revenue collection growth of 44.4 percent. This is equivalent to a performance rate of 119.4 percent against the target, an improvement from December 2020 performance rate which stood at 93.5 percent.

The Value Added Tax (VAT) domestic remittances grew by 8.5%. This was an improvement from a decline of 19.8% achieved in December 2020. The performance is expected to further improve as businesses continue to convert purchases to sales.

“With the implementation of the Post Covid-19 Economic Recovery Strategy 2020-2022, revenue collection performance has improved and is expected to accelerate further within forecast rates. With a positive forecast on the economic growth which is projected to bounce back at 6.4 percent in 2021 from the projected growth of 0.6 percent in 2020, KRA remains positive on the response of revenue to the economic resurgence,” Mburu said in a statement.

“KRA will continue to build up compliance enforcement efforts by driving the implementation of the new tax measures including: digital service tax, minimum alternative tax, and voluntary disclosure programme. The focus on trade facilitation and enhanced compliance through the implementation of post clearance audits, review of the end use of exempt products, comprehensive audit of exemptions, profiling and targeting, enhanced scanning and conducting intelligence -led verification of import cargo will continue to play a critical role in maintain revenue performance. In addition, KRA will also continue to escalate its fight against tax evasion and leverage on technology to support tax collection.”