Half-year tax collections grow fastest in nine years

Tax collections for the first half of the current financial year rose at the fastest pace since President Uhuru Kenyatta took power in 2013, largely lifted by a recovery in economic activity, pursuit of tax cheats and fresh taxation measures.

Exchequer statistics Treasury Secretary Ukur Yatani released last Friday show total tax receipts climbed to nearly Sh868.84 billion in the July-December 2021 period from Sh673.61 billion in the same period a year earlier.

This means the Kenya Revenue Authority (KRA) collected Sh195.23 billion, or 28.98 percent more in six months through last December than a year ago when economic activity was depressed by pandemic containment measures.

The jump came on the back of progressive economic recovery from the Covid-19 shocks on the economy, aggressive use of data by the taxman to catch cheats and increased taxation, which has raised the cost of basic commodities. The growth in tax receipts also benefited from Covid-induced 13.57 percent slump to Sh673.61 billion in the same period the year before.

Tax consultants said the collections, which surpassed the Treasury’s monthly target for exchequer revenue between August-December, have also been helped by the KRA’s aggressiveness in pursuing tax cheats using third-party data such as banks.

Philip Muema, a partner at Andersen Kenya, a tax and business advisory firm, said the use of technology by the KRA to mine data on iTax — the electronic tax payment and filing platform — has been key in driving collections above the goal set by the Treasury.

“It’s the aggression by the KRA to intelligently use information on iTax to mine data for individuals and firms that is contributing to KRA hitting their targets,” Mr Muema said.

KRA separately reported on Friday that it beat the half-year revenue targets — including agency fees on behalf of other State bodies such as Kenya Roads Board — by Sh47.53 billion after collecting Sh926.66 billion against a target of Sh929.13 billion.