The Kenya Revenue Authority (KRA) has reported a significant increase in tax collection for the financial year ended June 2024, but fell short of its revised target amid economic headwinds. The tax agency collected Ksh2.407 trillion, marking an 11.1% rise from the previous year’s Ksh2.16 trillion, but missed the revised target of Ksh2.5 trillion.
KRA Commissioner General John Njiraini attributed the shortfall to various economic challenges, including the depreciation of the Kenyan Shilling against the US Dollar, rising bank lending rates, and international conflicts disrupting supply chains. “Despite these hurdles, we’ve managed to achieve substantial growth in revenue collection,” Njiraini stated.
The KRA’s revenue collection efforts paint a picture of growth tempered by economic challenges. While the agency’s total collection of 2.407 trillion Kenyan shillings represents a substantial 11.1% increase from the previous year, it fell short of the revised 2.5 trillion shilling target, which had been lowered from an initial goal of 2.787 trillion shillings.
Exchequer revenue showed promising growth, with the KRA collecting 2.233 trillion shillings, a 9.5% increase from the previous year’s 2.030 trillion shillings. This translates to a performance rate of 95.8% against the target. A bright spot was the collection of agency revenues, which saw a remarkable 34.9% surge to 184.036 billion shillings.
Domestic taxes demonstrated robust performance, growing by 11.4% to reach 1.611 trillion shillings, achieving a 96.1% performance rate against its target. Customs revenue showed more modest growth, increasing by 4.9% to 791.368 billion shillings, with a performance rate of 94.6%.
The overall economic environment played a crucial role in the revenue outcome. Kenya’s GDP growth stood at 5.6% in the 2023 calendar year, up from 4.9% in 2022. Inflation, which averaged 6.8% in the first half of the fiscal year, moderated to 4.5% by the fourth quarter, thanks to interventions by the Central Bank of Kenya and the Treasury.
This marks the second consecutive year the KRA has missed its target, following a 5% shortfall in 2023. The last time the agency met its revenue target was in June 2022.
Looking ahead, the KRA faces an even more ambitious target of Ksh2.95 trillion for the 2024/2025 financial year. Economists are watching closely to see how the agency plans to bridge the gap and meet future targets in the face of ongoing economic uncertainties.
The revenue performance will likely impact the government’s spending plans and could potentially influence fiscal policies in the coming year. These figures, while demonstrating overall growth, underscore the complex economic landscape the KRA navigated during the fiscal year. They also highlight the ongoing challenge of meeting increasingly ambitious revenue targets in a fluctuating economic environment.
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