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Kenya

KRA misses target by Sh43.3bn in first 5 months of financial year

According to Treasury’s budget policy statement 2019, KRA collected to Sh633.7 billion, which is equivalent to 6.3 percent of GDP, against a target of Sh677 billion/file

NAIROBI, Kenya, Jan 11 – Kenya Revenue Authority recorded a shortfall of revenue collection amounting to Sh43.3 billion in the five months to November 2018.

According to the Treasury’s budget policy statement 2019, KRA collected to Sh633.7 billion, which is equivalent to 6.3 percent of GDP, against a target of Sh677 billion.

The shortfall was attributed to income tax from corporations, which recorded negative growth. However, income Tax from individuals, (P.A.Y.E) and Value Added Tax (VAT) remained largely on target and are expected remain on course into the second half of the year.

The Treasury however notes that the amount collected grew by 13.5 percent compared to the same period in the FY 2017/18.

The growth was driven in part by a rebound effect, after the poor performance in the previous financial year as well as two months effect of the tax policy measures introduced in the Finance Act 2018.

Going forward, the Treasury expects income tax in 2019 to bounce back to target levels by third quarter, due to strong performance recorded in the economy in the first half of the financial year.

On the other hand, revenues as a share of GDP are projected to rise from 17.3 percent in the FY 2017/18 to 18.3 percent in the FY 2019/20.

The additional resources are expected to support the fiscal consolidation program and bring the fiscal deficit down to 3.0 percent of GDP by FY 2022/23.

To mobilize revenues, the Government has put in place revenue enhancement measures to boost performance and cushion against further revenue shortfalls by strengthening tax administration and compliance.

This will be done through enhanced scanning to detect concealment and increase efficiency in cargo clearing through procurement of additional scanners and full integration of all scanners.

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It will also be done using Regional Electronic Cargo Tracking System (RECTS) to ensure all goods reach the desired destinations and avoid dumping.

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