The Kenya Revenue Authority (KRA) surpassed its October revenue target by Kes. 6.8 billion, achieving a performance rate of 104.6% in domestic taxes. The tax agency collected Kes. 210 billion in October, exceeding its target of Kes. 203.5 billion.
According to KRA’s records, the domestic tax department exceeded its revenue target by Kes. 5.93 billion. The department collected Kes. 136.8 billion, surpassing its target of Kes. 130.9 billion.
However, certain areas experienced setbacks. Value-added tax (VAT) recorded a negative variance of Kes. 2.3 billion, and domestic excise tax, excise tax on airtime, and excise tax on financial services also saw declines.
On the positive side, the Customs and Border Control department exceeded its target by Kes. 941 million, collecting Kes. 73.2 billion, compared to the target of Kes. 72.2 billion. Overall, KRA surpassed both the total and exchequer revenue targets by Kes. 6.779 billion (a performance rate of 103.3%) and Kes. 243 million (100.1% performance rate), respectively, as per the statement released on November 5.
The tax revenues from oil significantly contributed to the performance, with a surplus of Kes. 3.8 billion, reaching a performance rate of 114.3%. The Road Maintenance Levy raised Kes. 4.3 billion, excise duty on oil brought in Kes. 198 million, the Petroleum Regulatory Levy contributed Kes. 187 million, and the Railway Development Levy generated Kes. 92 million.
KRA attributed this strong performance in oil tax revenues to a 30.7% growth in overall oil volumes, particularly driven by increases in petrol (62.3%), diesel (4.2%), and other oil products (46.1%).
The taxman further noted that an increase in the Road Maintenance Levy, from Kes. 18 to Kes. 25 per litre, implemented via Legal Notice No. 109 of July 10, 2024, contributed to the boost in performance.
In domestic taxes, where the agency exceeded its target by Kes. 5.97 billion, withholding tax saw a notable increase of Kes. 2.4 billion. KRA attributed this growth to strong collections from both the private and public sectors, mainly from interest, dividends, and pension or retirement annuity in the private sector. Withholding tax collections from the private sector grew by 27.4%, while public sector collections rose by 41.9%.
Additionally, Pay As You Earn (PAYE) recorded a surplus of Kes. 689 million, driven by a Kes. 1.9 billion surplus from public sector remittances, reflecting a 16.4% growth. This indicates increased disbursements to various government agencies, according to KRA.
Corporation tax exceeded its target by Kes. 155 million, and taxes from betting activities surpassed expectations by Kes. 66 million, including Kes. 16 million from betting tax and Kes. 50 million from excise tax on betting services.
Despite these strong results, KRA noted that certain tax categories did not meet their targets. PAYE from the private sector had a shortfall of Kes. 1.213 billion. KRA explained that this was due to the utilization of Kes. 90.5 million in refunds to offset PAYE tax liabilities for some Large Taxpayer Office (LTO) taxpayers.
Additionally, the average monthly cash pay per employee decreased from Kes. 78,034 between June and September 2023 to Kes. 75,781 between June and September 2024. KRA attributed this decline to ongoing restructuring efforts by organizations to manage operational costs.
Domestic VAT recorded a deficit of Kes. 2.4 billion, as remittances from sectors such as administrative and support services, electricity, oil and gas, finance, professional and scientific services, transport, and wholesale and retail trade dropped by 26.3%. KRA noted that these sectors account for about 33% of normal domestic VAT. Turnover sales from these sectors fell by 14.7%, while input growth remained minimal at 0.5%.
KRA also highlighted that several taxpayers used credits from previous months to settle current tax liabilities. The use of Refund Adjustment Vouchers (RAVs), amounting to Kes. 738 million, further impacted VAT performance.
