KRA blames tax exemptions on food items as it misses revenue target by Sh79 billion

The Kenya Revenue Authority (KRA) missed its revenue target for the first quarter of the current financial year by Sh79 billion.

The taxman targeted to collect Sh665.9 billion but managed to collect Sh586.9 billion, a 8.4 percent growth compared to the Sh45.3 billion collected in a corresponding period last year.

Speaking before the National Assembly’s Finance Committee, KRA Commissioner-General Humphrey Watanga said the authority missed the target primarily due to low oil imports, tax exemptions on food-related items, and failure by some government entities to remit pay-as-you-earn(PAYE).

Wattanga said oil revenue dropped 8.6 percent over the July-September period. He observed that oil volumes dropped by 12.4 percent during the period due to a dip in fuel consumption occasioned by high pump prices.

”This resulted in a performance rate of 88.1 percent against the target, leading to a deficit of Sh79 billion and a growth of 8.4 percent,’’ he said.

”Exchequer revenue totaled Sh545.3 billion during the period July-September 2023 against a target of Sh617.3 billion translating to a deficit of Sh72.5 billion,’’ he added.

Also Read: KRA collects Sh3.4 billion in six weeks from Tax Amnesty

Domestic taxes collected during the review period amounted to Sh389.5 billion, while Customs and Border Control posted a collection of Sh196.1 billion.

Withholding income tax registered an overcollection of Sh34.4 billion on account of increased remittance from the public sector, which grew 99.2 percent, while private sector remittance surged 40.4 percent.

The Taxman attributed the impressive performances to the implementation of e-Tims,  with VAT monthly average collection standing at Sh26 billion compared to Sh21 billion reported in a corresponding period last year.

The Tax Amnesty program that was effected on September 1 also enhanced collection, with KRA collecting a total of Sh3.4 billion.

In the Second quarter of the 2023/24 financial year, KRA targets to collect Sh684.5 billion as it eyes Sh2.768 Trillion by the end of Financial Year 2023/2024 and over Sh3 Trillion by Financial Year 2024/2025.