14 January 2014

Kenya: KRA Surpasses 2013-14 First Half Target

Nairobi — The Kenya Revenue Authority (KRA) has surpassed its 2013-2014 first half target by Sh600 million.

KRA Commissioner General John Njiraini said the authority posted Sh470.8 billion against a target of Sh470.2 billion representing a 23.7 percent growth compared to the previous year, when they collected Sh380.7 billion.

Njiraini attributed the performance to a strong VAT growth and enhanced monitoring of Pay As You Earn (PAYE) remittance by County Governments.

Njiraini says VAT grew significantly in customs, due to enforcement activities backed by the new legal provisions and a better business performance.

"Under the category of domestic taxes VAT didn't pick up as first due to accumulated credit from enterprises which they have to exhaust and then start paying VAT it's in this quarter that we will see the real impact of VAT in domestic taxes," he stated.

The custom services department collected Sh168.5 billion during the first half of the year under review recording a revenue growth of 28.8 percent compared to same period last while domestic taxes department collected Sh300.5 billion recording a revenue growth of 21 percent when compared to similar period last year.

The road transport department raised Sh1.85 billion, a revenue growth of 21.3 percent compared to the first half of financial year 2012/ 2013.

"Before the county governments we used to collect about Sh50 million per month as PAYE from the former city councils but now we are collecting about Sh200 million per month, as well as better monitoring of County Governments who are 47 in number other than the former 175 city councils," he said.

The authority has so far collected Sh242.6 billion down from the target of 245.5 billion in the second quarter of 2013/2014.

KRA is targeting to collect Sh973.5 billion in the financial year 2013/2014, with expectations to collect Sh70.2 billion in January 2014 and Sh208.4 billion during the third quarter of 2013/2014 financial year.

"The factors likely to impact the collection include deepening of VAT Act 2013, impact in domestic front as companies fully implement provisions and exhaust carried forward credits, as wells as interventions to address evasion challenges in respect to previously zero rated goods," he said.

Njiraini said the authority is set to respond rapidly to the discoveries of oil and minerals in the country by developing capacity that includes dedicated corporate level structure to address the challenge.

He also revealed that terms of service for 60 senior staff have been converted from permanent to three-year contracts with effect from January 2014 and will extend the programme to other 250 senior staff by the end of 2013/2014 financial year.

He says KRA has introduced new generation excise stamps that have added security features with track and sale capability in order to address the challenge of fake excise stamps in the market and sale of un-taxed goods which attract duty.

This comes as the authority imposed tax on all winnings from gaming and betting activities with winners subjected to withholding tax at the rate of 20 percent of the fair market value of the winning if paid in kind.

According to the KRA notice, payers of the winnings will be required to deduct the withholding tax with effect from January 1, 2014 and remit the same to the commissioner by the 20th of the subsequent month.

"With continued stabilization in the micro economics environment, KRA expects robust performance in the third quarter that will sustain the momentum achieved in the first half of 2013/2014," he stated.

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