“The KRA has also stepped up its fight against tax evasion to ensure that no revenue is lost,” added the agency.
The economy shrank to 0.6 percent last year and, due to the measures taken to contain Covid-19, underperformed key tax heads, including pay-as-you-earn (PAYE), import duties, value added tax (VAT) and other income taxes.
According to the National Treasury’s total revenue for the nine months ended March 31, this year fell Ksh 31.6 billion ($ 295.32 million) below the target.
Revenue agency recoveries, including appropriation-in-aid (AIA), totaled Ksh 1.24 trillion ($ 11.58 billion) against a target of Ksh 1.27 trillion ($ 11.86 billion) ), mainly due to the underperformance of PAYE, the domestic VAT ministerial credit (AIA) and other income taxes.
The situation worsened between March and April 2021. The country once again struggled with tough measures to contain Covid-19, with five counties, including Nairobi, locked due to a surge in the third wave of the coronavirus.
Just under two weeks ago, however, the tax official said that it defied all odds to exceed its sales target by four percent after eight years since the 2013/2014 financial year.
According to the tax bureau, the agency took a record tax revenue of Ksh 1.669 trillion ($ 15.59 billion) in fiscal year 2020/2021, up from a target of Ksh 1.652 trillion ($ 15.43 billion), a surplus of The equivalent of 16.8 billion Ksh ($ 157 million).
The collections have more than doubled over the past 10 years from Ksh 707 billion (US $ 6.6 billion) in fiscal 2011/2012.
“The impact of the Covid-19 pandemic on the economy and the associated containment measures have slowed economic growth in 2020. Economic growth declined an average of 0.4 percent in the first three quarters of 2020, compared to an average growth of 5.3 percent compared to this. “Period in 2019,” said the National Treasury in its quarterly economic and budget report dated May 2021.
According to the tax bureau, the Customs and Border Control Department collected Ksh 624.77 billion ($ 5.83 billion), surpassing its target of Ksh 606 billion ($ 5.66 billion), while oil taxes rose to 226.68 Billion Ksh ($ 2.11 billion), exceeding its target by 12 Ksh. 25 billion ($ 114.48 million).
Corporate tax rose 3.7 percent, driven by higher remittances from energy, agriculture, and construction, while PAYE and domestic sales tax revenues fell 9.3 percent and 7.9 percent, respectively. Domestic excise tax and withholding tax rose 12 percent and 3.8 percent, respectively, according to the tax office.
“Of course we rely on what they say about their numbers because we think they are who they are, but I think the main thing is that their target wasn’t really increased last year because the budget was of course ready was. “Covid had picked up. It had been shown to have a big impact, ”Fred Omondi, East Africa Tax and Legal Leader at Deloitte East Africa consultancy, told The EastAfrican.
“On the customs side, I was a bit surprised, but maybe someone needs to look at the trade data because customs exceeded the target while there were many disruptions in the supply chain. The interesting thing is that KRA was still able to exceed the targets. Someone has to look at the trade data to see what would have helped; whether people imported more products and in which category, ”he added.
However, according to KRA, customs revenues were aided by growth in both oil and non-oil import values, with only passenger-related revenues falling.
“Customs revenue was also driven by enforcement measures (freight scanning, verification) that ensured the accuracy of declarations, the agency said.
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