KRA confident it will hit revenue targets

Taxman pegs optimism on reforms and improved compliance to meet Sh1.5 trillion target

KRA deputy commissioner corporate policy Maurice Oray (left) and head of marketing surveillance Caxton Masudi on June 18, 2018 in Nairobi. PHOTO | SALATON NJAU | NMG 

IN SUMMARY

  • The KRA says tax reforms and improved compliance will enable it meet the Sh1.5 trillion collection target set by Treasury.
  • The target is for the financial year ending this month.
  • KRA missed its half year budget by Sh44.8 billion according to the National Treasury’s Post-Election Economic and Fiscal report.

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Last year's sluggish economy has done little to dampen the taxman's spirit as the Kenya Revenue Authority (KRA) expressed optimism that it will still hit its revenue targets.

The KRA says tax reforms and improved compliance will enable it meet the Sh1.5 trillion collection target set by Treasury for the financial year ending this month.

This is despite the economy taking a hit from drought and last year’s lengthy electioneering period.

KRA senior assistant commissioner, Maurice Oray, said tax collection strategies centred on automation and legal reforms will also enable it hit the newly set target of Sh1.7 trillion spelt out in the budget statement last week.

“We now have proper legal and technological infrastructure and we are confident about meeting this target. In the past, a lot of external factors have played roles in driving our potential down. This year, the optimism is high as we get on full gear to collect as much revenue as possible before the financial year comes to an end,” Mr Oray said Monday during KRA's post budget analysis forum.

However, when pressed on what collection levels the taxman had achieved to peg the confidence on, Mr Oray said collections were ongoing hence he could not readily verify how close KRA was to meeting the targets - barely two weeks to the close of the Financial Year.

Analysts

The renewed optimism contradicts analysts' projections that revenues were likely to fall below target on the back of depressed income and corporation tax.

Researchers at Genghis in February pegged the bearish outlook on the slower rise in that capital tax collection in the first half of the year.

“The first quarter period ending September 2017 saw revenues in import duty, excise duty and PAYE segments fall off target,” said Genghis in a macro-economic and fixed income report released in February.

“Despite revenue collection efforts improving in the last three financial years, we are not optimistic of a better performance in the current financial year,” added the researchers.

Missed targets

KRA missed its half year budget by Sh44.8 billion according to the National Treasury’s Post-Election Economic and Fiscal report.

The 6.8 per cent shortfall missed the projected collection target of Sh702 billion it was meant to collect for the period to December, which was marked by heated the political contest that hurt many businesses.

If the 2017/2018 targets are met, KRA will have a record five years of missing targets with the last year’s falling short by just 0.8 per cent.

The taxman collected Sh1.365 trillion in the 12 months ending June 2017, a 13.8 per cent increase compared to the previous year.

Treasury has kept adjusting KRA’s targets based on optimistic macro-economic forecasts that sometimes fail to materialise, thus forcing the country into more borrowing to fill budget gaps.

Treasury has proposed about 8 legal amendments to the various tax laws to prop up revenue collections including increased excise duty on mobile money transfer services, pre-emptive taxes to small businesses and demurrage fees paid to foreigners.

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