NAIROBI, Kenya, May 17 – History was made last month as the Kenya Revenue Authority collected Sh132.1 billion in revenue, marking its highest monthly collection ever.
According to KRA, April’s strong performance is a continuation of the trend witnessed in the second half of the 2015/2016 financial year, with the cumulative growth for 10 months to April standing at 12.1 percent.
“The performance was driven largely by improvements in Pay As You Earn (PAYE) taxes which grew by 15.8 percent and other income taxes which grew by 20.1 percent that month,” said KRA Commissioner General John Njiraini.
KRA added that the strong growth in other income taxes is remarkable given that bank remittances in April 2016 stood at Sh11.4 billion compared to Sh12.3 billion in April 2015, a decline of 8 percent attributable largely to bad loans provisioning.
The increase in the amount of revenue collected is despite the weak performance in the banking sector during the period.
Cumulative revenue collection to April 2016 stood at Sh974.5 billion, marking a Sh105.4 billion increase over the same period the previous financial year.
Off the cumulative revenue, 98.4 percent constituted Exchequer revenue.
Domestic taxes recorded a surplus of Sh9.3 billion with full year surplus for the tax head expected to top Sh12 billion. KRA attributed this growth to reforms undertaken which include iTax roll out and expansion of Withholding VAT, with coverage for the latter presently standing at over 3,500 government and large corporate enterprises.
Customs and border control however marked weak performance. KRA however says that there is strong evidence that pre-export verification of conformity (PVoC) enforcement is yielding fruit.
“KRA is confident that the reforms undertaken in customs will generate the benefits expected once import cargo volumes get back to normal levels.”
Addressing the banking sector, Njiraini said that KRA has taken the position that bad debts occasioned by lending practices inconsistent with Central Bank prudential guidelines shall not qualify for deduction for tax purposes.
He added that going forward, banks shall not be permitted to enjoy tax deductions for loans arising from irregular insider lending or loans for which inadequate collateral was secured.
As far as future prospects are concerned, KRA said that it is optimistic of brighter prospects for the remainder of the current financial year and for the next one.