By Steve UMIDHA

The Kenya Revenue Authority (KRA) has surpassed the revenue target of Kshs. 2.555 Trillion for the Financial Year 2024/2025 after collecting Kshs. 2.571 Trillion.

The performance is a growth of 6.8% and a performance rate of 100.6%, compared with the Kshs. 2.407 Trillion collected in the last financial year.

Economic Environment

The revenue performance reflects the prevailing economic indicators especially the GDP growth of 4.7% (Economic Survey) with notable growth recorded in key sectors like agriculture, forestry and fishing, financial and insurance activities, transportation and storage, and real estate.

Further, overall inflation eased to average at 3.6% in 2024/25 compared to 6.3% in 2023/24, while exchange rate of the Kenya Shilling against the US Dollar strengthened to an average of Kshs 129.35/US$ in the current year under review down from Kshs 144.1 in the previous year. In addition, international oil prices per barrel dropped by 12.5%, with these factors leading to aggregate downward adjustment of local fuel pump prices for both petrol and diesel by 11.8% and 12.2% respectively.

However, other factors moved contrary to expectations, thus impacting revenue negatively.

For example, the first half of the Financial Year 2024/25 was characterised by numerous economic headwinds, including shelving of the Finance Bill 2024, high bank lending rates, global tariffs war, and international conflicts.

In particular, overall import values recorded weak growth of 0.04%, affected by drop in import values of fuels and lubricants, and food and beverages which recorded declines of 16.4% and 14.6% respectively. Further, export values declined by 2.0% especially from horticulture (-2.5%) and tea (-15.4%).

In addition, access to credit by the private sector remained constrained due to higher commercial bank lending rates in the current year compared to the previous year. However, a downward adjustment in lending rates is anticipated following the Central Bank of Kenya’s decision to lower the benchmark rate to 9.75% in June 2025. As at the end of December 2024, credit extended by commercial banks to the National Government grew by 13.9 per cent, while credit to the private sector declined by 1.1 per cent. This contraction in private sector credit dampens the prospects for investment and expansion across key economic sectors.

 

Notwithstanding these challenges, KRA’s robust measures yielded a significant revenue collection turnaround in the second half of the financial year. Revenue grew by 9.1%, compared to the 4.5% growth recorded in the first half of the financial year.

 

 

Revenue Performance for FY 2024/25

1. Exchequer Revenue

The Exchequer Revenue grew by 4.5% after KRA collected Kshs. 2.323 Trillion compared to Kshs. 2.223 Trillion collected in the previous financial year. This translates to a performance rate of 99.0%, against a target of Kshs. 2.347 Trillion.

2.     Agency Revenue

KRA also collected Kshs. 248.276 Billion on behalf of other government agencies, surpassing the target by Kshs. 40.465 Billion. This translated to a performance rate of 119.5%.

3.     Domestic and Customs Revenue Performance

Domestic Revenues registered a growth of 4.8% after KRA collected Kshs. 1.688 Trillion against a target of Kshs. 1.721 Trillion. This translates to a performance rate of 98.1%.

Customs Revenue recorded a performance rate of 105.9% with a collection of Kshs. 879.329 Billion against a target of Kshs. 830.368 Billion. This translates to a revenue growth of 11.1%, compared to the same period in FY 2023/2024.

Performance of Key Tax Heads

Domestic VAT: Domestic VAT collection stood at Kshs. 327.336 Billion, reflecting a growth of 4.2% compared to the previous year. In the first half of the FY, KRA collected Kshs. 148.374 Billion. In the second half of the FY, KRA implemented a raft of VAT compliance initiatives to seal revenue loopholes, enabling the collection of Kshs. 178.962 Billion. These initiatives included strict VAT registration controls and verification of declarations.

Betting Taxes: Excise Tax on betting services surpassed the target after registering a surplus of Kshs. 1.945 Billion with a performance rate of 117.2%. The tax head collected Kshs. 13.233 Billion against a target of Kshs. 11.288 Billion. Betting Tax also registered a performance rate of 103.7% after collecting Kshs. 5.70 Billion against a target of Kshs. 5.495 Billion.

Pay As You Earn (P.A.YE): KRA collected Kshs. 560.963 Billion from P.A.Y.E, signifying a growth of 3.3%. Despite the slow growth, the tax head

 

recorded a performance rate of 99.0%. The slow growth was attributed to utilisation of adjustment vouchers by taxpayers to offset tax liabilities and policy impacts, which included adjustment of SHIF and Housing Levy from relief to allowable deductions before tax computation.

Corporation Tax: Corporation Tax grew by 9.9% compared to 4.9% in the last financial year, after KRA collected Kshs. 304.833 Billion against a target of Kshs. 321.080 Billion. The performance was boosted by a number of sectors, including ICT, manufacturing, financial, real estate, wholesale and retail among others.

Domestic Excise: The tax head recorded a performance rate of 97.2%, with a collection of Kshs. 69.385 Billion. The performance is attributed to a decline of revenue remittance from manufacturers of beer and tobacco products by 13.9% and 8.9% respectively. KRA continues to enhance compliance measures in the sector.

It is important to note that Section 47(2)(b) of the Tax Procedures Act, Cap 469B, stipulates that approved claims not settled within six months shall be offset against existing and future tax liabilities. In line with this provision, adjustment vouchers amounting to Kshs 49.673 Billion were utilized by taxpayers to settle tax obligations across various tax heads in FY 2024/25. This reflects a significant increase from Kshs 24.845 Billion utilized during the corresponding period in the previous financial year.

Significant amounts of adjustment vouchers were utilized across various tax heads, with Corporation Tax accounting for Kshs 28.622 Billion, PAYE for Kshs 10.422 Billion, and Domestic VAT for Kshs 6.510 Billion, among others.

Revenue Mobilisation Strategies

1. Ninth (9th) Corporate Plan Implementation

During the period under review, KRA continued implementing its 9th Corporate Plan, which runs for a period of five years. Over this period, the organisation is focusing on enhancing revenue collection, increasing customer satisfaction, digitalising revenue administration and strengthening human resource management.

2.     Technology Adoption

KRA has continued to leverage disruptive technology to enhance efficiency, transparency and effectiveness in revenue collection. These innovations are part of KRA’s broader digital transformation and tax modernisation strategy to improve compliance, reduce leakages and enhance taxpayer experience.

Some of these technologies include Electronic Tax Invoice Management System (eTIMS), which has minimized VAT fraud; improved tax compliance; simplified VAT filing and payment process; facilitated tax base expansion and increased tax revenue. KRA recently rolled out eTIMS fuel

 

stations system, designed specifically to streamline operations and address compliance challenges previously experienced within the industry.

KRA has also deployed Artificial Intelligence (AI) to analyse scanner images. This has helped in interception of smuggled goods and sealed revenue leakages.

3.     Simplification of Processes

Simplicity is one of KRA’s Core Values, aimed at eliminating complexities that taxpayers experience. The Authority has simplified filing of returns through VAT auto-population and adopted mobile and digital payment platforms to streamline tax payments.

 

In addition, the introduction of a Centralized Release Office (CRO) has made cargo clearance at the ports easier and more efficient. This has subsequently improved cargo clearance time from an expected average of 110 hours to 43 hours and enabled KRA to collect Kshs.22.7 Billion.

 

4.     Organisational Restructuring

KRA has implemented organisational restructuring within its functional areas of revenue, technology and service to create an agile and responsive tax administration framework, strengthen the digital infrastructure for data-driven decision-making and automation, and to improve taxpayer engagement and support.

 

Among these changes included integration of the Large and Medium Taxpayers into a core functional area, and the Micro and Small Taxpayers as another core functional area. The changes provided more personalised support to address taxpayers’ unique needs.

 

The functional areas have also supported tax base expansion in alignment with the Medium-Term Revenue Strategy.

5.     Long-Term Objectives

Moving forward, KRA will increasingly rely on data analytics, Artificial Intelligence, Machine Learning and the Enterprise Application Programming Interface (API) platform. Through this platform (GavaConnect), KRA has so far rolled out the Electronic Rental Income Tax System (eRITS).

This initiative is a vital part of KRA’s long-term strategy to simplify tax processes, improve transparency and expand Kenya’s tax base. The API platform facilitates seamless integration between KRA’s systems and third- party platforms, allowing businesses, developers and service providers to automate tax-related services.

Revenue Collection Measures

 

Revenue growth for the period under review was attributed to implementation of a number of measures, including the following:

1.     Taxation of Digital Economy (DST/SEP, VAT on Digital Market Supply-DMS, DAT)

Taxation of the digital economy for the period under review recorded a performance rate of 112% after netting Kshs. 14.3 Billion, which translates to a 32% growth from the Kshs. 10.8 Billion collected in FY 2023/24. These taxes are collected from non-resident taxpayers in the digital economy, including multinational digital companies. KRA’s initiatives under this strategy include a robust recruitment of non-resident taxpayers and deployment of technology to ensure compliance.

2. Tax Base Expansion: This aims to on-board taxpayers previously not paying taxes and convert inactive taxpayers into active taxpayers. The programme enabled KRA to collect Kshs. 24.9 Billion in revenue. Some of the initiatives under TBE include launch of the Electronic Rental Income Tax System (eRITS) that has provided visibility of rental properties, rental income and occupancy status; recruitment of landlords under the Monthly Rental Income (MRI) programme through a taxpayer mapping process (Block Management System – BMS); recruitment of additional taxpayers and provision of additional tax obligations based on their income.
3. Taxation at Source: Through this programme, KRA has integrated with other systems, allowing for an almost real-time collection of information and revenue directly at the source. Some of the interventions under this strategy include:
4. Integration of Betting and Gaming Companies into KRA tax system. The integration has given KRA real-time access to 141 companies in the gaming and betting sector. This enabled both Excise Tax on betting services and Betting Tax to surpass the FY 2024/25 target.
5. Debt Collection: KRA enhanced collection from debt programmes on non-compliant taxpayers, mobilising a total of Kshs. 141.261 Billion in FY 2024/2025. This performance is attributable to follow-ups on demand notices and the debt instalment plans agreed upon with taxpayers.
6. Tax Amnesty: A total of 3,512,835 taxpayers benefitted from the programme after they were granted waiver on penalties and interests amounting to Kshs 95.645 billion. Through the programme, KRA collected Kshs. 29 Billion after 116,144 taxpayers voluntarily declared and paid.
7. Trade Facilitation: In its commitment to efficiency and effectiveness in reduction of cargo clearance times, KRA has enhanced the iCMS capabilities to allow for Pre-Arrival processing of documents using the Bill of Lading as the base document for declaration of Customs entries. Additionally, KRA

 

has spearheaded the formulation of joint Service Level Agreements (SLAs) for sea clearance cargo with 23 Partner Government Agencies (PGAs). This will improve efficiency in clearance of sea imports and exports by ensuring predictability and accountability. KRA has also established three trade facilitation centres along the Northern Corridor — Kainuk, Lodwar and Kakuma. These centres are dedicated to supporting cargo monitoring and facilitating trade with South Sudan, Ethiopia and Uganda.

7. Dispute Resolution Framework: KRA uses the Alternative Dispute Resolution (ADR) framework as a trade facilitation mechanism by ensuring amicable resolution of tax disputes, as opposed to protracted legal processes. For the period under review, 97o cases were concluded, enabling release of Kshs. 15.296 Billion. This demonstrates KRA’s commitment to promoting compliance through non-adversarial mechanisms. KRA also collected Kshs.65.09 Billion through litigation processes.
8. Anti-Corruption Measures: KRA’s interventions to combat corruption and seal revenue leakages include implementation of the iWhistle programme, which facilitated collection of Kshs. 6.8 Billion from 821 cases reported anonymously; profiling of tax evaders and review of refunds and debt management processes. Internally, KRA conducts lifestyle audits on staff and runs robust internal awareness campaigns to ensure staff uphold integrity in their work. Through the iWhistle, 45 staff integrity cases were reported and action taken.
9. Customer Support Programmes: These programmes are aimed at building partnerships and increasing engagements to ensure the public fully participates in revenue administration measures. In FY 2024/25, KRA held a total of 37 engagements with different sectors, nine sensitisations, 15 public participation sessions and nine roundtables. These initiatives have played a key role in equipping individuals and other entities with relevant information on taxation.

Conclusion

Despite the challenging economic environment in FY 2024/2025, taxpayers exhibited resilience and voluntarily paid their taxes to support the country’s economic transformation. As at 30th June, 2025, KRA recorded 79% on-time filing.

On behalf of the KRA Board of Directors and staff, I appreciate all Kenyans for remaining committed to honouring their tax obligations, which plays a key role in Kenya’s economic sustainability and development.

As KRA commemorates its Pearl Anniversary this July, the organisation celebrates remarkably significant milestones over the last 30 years, growing revenue collection from Kshs. 122.066 Billion in 1995 to more than Kshs. 2.5 Trillion this year. KRA remains committed to simplifying tax payment processes and ensuring a positive taxpayer experience. KRA emphasizes its unwavering dedication to upholding integrity and professionalism in all interactions with taxpayers.