KRA’s revenue collection for the 2016/2017 financial year ended in June 2017, falling short by a marginal 0.8% according to the report they released yesterday.
Against a target of Sh. 1.376 trillion set by the Treasury, KRA said it managed to collect Sh. 1.365 trillion in the 12 months. The above record by KRA was 13.8% higher than the Sh. 1.21 of the previous financial year.
John Njiraini, KRA’s commissioner general said the growth in 2016/2017 was the highest in the last five years.
“FY 2016/17 performance compares well with prevailing economic indicators, including GDP [gross domestic product] growth of 5.5 per cent and average inflation rate of 8.1 per cent, the latter which mainly affected food items exempt from taxation,” Mr Njiraini commented, “The FY also recorded weak growth in cargo import traffic, a phenomenon witnessed across all the EAC economies, and which adversely impacted customs revenue.”
The taxation revenue has almost doubled in the last five years from Sh. 707.4 billion and currently accounts to 19.3% of Kenya’s GDP.
According to Mr. Njiraini, Kenya’s ratio of its taxation to its GDP was the second highest in Africa, excluding the oil-economy countries.
“The major contribution to excise growth was enhanced compliance brought about by improved enforcement through the Excisable Goods Management System (EGMS), especially for the spirits sector where annual growth reached 22.7 per cent in FY2016/17,” Mr Njiraini said.
KRA says that VAT collections showed the largest growth at 21.2% year to year, just about to match its four-year average of 25.1%. The performance is chained to expansion of withholding VAT framework, covering a total of 3,231 large taxpayers, as well as with a promising growth in construction and telecommunications.
Corporation tax has also grown by 18.2%, the most stable in the last four years, with fundamental sectors either meeting or exceeding their targets.
Payroll taxes on the other hand encountered a growth of 7.9%, as compared to the previous four-year average of 12%. The poor performance is attributed partially to the expanded tax relief granted in January 2017 via widening tax bonds.
Written by Collins Gathogo