advertisement

Markets

KRA to collect Sh1.2 trillion in the next fiscal year

The Kenya Revenue Authority headquarters at Times Tower in Nairobi. PHOTO | FILE
The Kenya Revenue Authority headquarters at Times Tower in Nairobi. PHOTO | FILE 

The Kenya Revenue Authority (KRA) is expected to collect Sh1.16 trillion in the coming fiscal year, 15.4 per cent higher than the revised estimate for this financial year.

Preliminary estimates published last week by the Treasury Secretary Henry Rotich show income tax and value added tax (VAT) collections will rise by the highest amounts.

VAT is expected to grow by nearly a fifth to Sh319.5 billion while the income tax is to rise by 15.6 per cent to Sh626.5 billion. VAT and income tax are mainly driven by corporate transactions and profitability.

The VAT collection is benefiting from the implementation of a new law passed last year, where items that were previously zero-rated or exempted are now subject to tax.

Mr Rotich says in the estimates document that the revenue targets are supposed to be achieved through simplification of the tax code in line with best practices and use of technology by the KRA.

“This will involve reviewing in order to modernise our tax laws, institute a high level of automation in tax revenue collection,” says Mr Rotich.

Excise and import duties will increase by Sh5.2 billion to Sh125 billion and by Sh12.9 billion to Sh90.6 billion, respectively, in 2015/16.

The KRA said last Thursday that it had embarked on increasing automation of its processes for various taxes as part of its effort to increase collections.

Mr Rotich says the National Treasury is working on a robust and simplified excise and income tax laws. A tax procedure bill has also been prepared.

Through changes in the law, the Treasury envisages removal of exemptions and distortions to the tax system.

“In modernising the tax laws, the government will rationalise existing distortionary tax incentives, expand the income tax base and remove tax exemptions as envisaged in the Constitution,” Mr Rotich says.

KRA commissioner-general John Njiraini said the ambitious economic growth targets required it to take new approaches to revenue mobilisation.

Mr Njiraini said the taxman was adopting better technological systems, improving internal processes especially in audit and compliance monitoring as well as human capital development, among others.

One of the ways KRA is out to increase tax collection is through roping in enterprises and people who do business with entities like government. The withholding VAT has been reintroduced after being done away with in 2010.

advertisement