Kenya: KRA Surpasses December Revenue Target to Collect Sh166 Billion, Reflecting Economic Recovery Prospects

17 January 2021

Nairobi — The Kenya Revenue Authority surpassed its revenue collection target for the month of December 2020, the first positive and above target collection rate since the outbreak of Covid-19 pandemic.

KRA Commissioner General Githii Mburu said a total of Sh166 billion was collected against a target of Sh164 billion representing 3.5 percent growth over the same period last year.

The improved performance has been attributed to the economic recovery following the relaxation of the COVID-19 containment measures and enhanced compliance efforts by KRA in the month of December.

Deaprtments that boosted KRA's performance in the month under review include the Customs and Border Control Department which recorded the highest ever monthly revenue collection in KRA's history by collecting Sh60.777 billion, reflecting growth of 40.9percent and registering a revenue surplus of Sh12.191 billion.

"This influenced a cumulative surplus for Customs revenue of Sh3.788 billion at the end of December 2020 compared to a deficit of Sh8.402 billion as at the end of November 2020," said Mburu.

The Domestic Taxes Department also registered the highest collection rate of 91.1 percent since the start of the COVID-19 pandemic.

Pay As You Earn (PAYE) taxes recorded the best performance at 99.8percent while Withholding Tax surpassed the target by Sh725 million reflecting positive economic recovery prospects.

Corporation Taxes recorded a performance rate of 93.5 percent against the target. According to the taxman, the performance was negatively affected by a decline in instalment remittance from banks by 25.3 percent - from Sh13.140 billion in December 2019 down to Sh9.810 billion in December 2020.

The Value Added Tax (VAT) domestic remittances also declined by 19.9percent as purchases accelerated at a faster rate at 8.9percent growth than sales at 1.4percent growth, thereby diminishing the VAT forecast for the month.

KRA says the decline is expected to reverse as businesses convert the stock to sales and further from the reversal of the rate to 16percent effective 1st January 2021.

At the same time, due to the containment and mitigation measures put in place to curb the spread of COVID-19, the economy remained depressed leading to a 5.7 percent contraction in real GDP in the second quarter of 2020 compared to a 4.9per cent growth in the first quarter of 2020.

The Government is also exploring the deployment of the Tax Appeals Tribunal on a full-time basis to expedite the resolution of tax disputes which are currently holding more than Sh 200 billion.

These measures, KRA's statement reads, will support enhanced revenue collection and anchor the much-needed funding by the Government.

Mburu further painted a positive outlook for the tax collector backed by the Post COVID-19 Economic Recovery Strategy 2020-2022, where revenue performance is expected to accelerate within forecast rates.

"KRA is further intensifying the use of a robust intelligence network to curb tax evasion and the use of technology to support tax collection," he added.

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