Tax pain: How KRA plans to raid your payroll in its Sh2.9Trillion revenue target

By Victor MUJIDU

The Kenya Revenue Authority eyers KES 4 trillion revenue collection by 2027, with a target of KES 2.9 trillion in the upcoming fiscal year that kicks off in July 1.

The Government through the National Treasury has set foot on the revenue collection program, intending to build new reforms that will expedite the tax collection of the targeted KES 4 trillion over the medium-term budget statement for the period to June 2027.

To meet that target KRA has identified five main revenue streams namely; payroll, corporation, VAT, excise, and import duty.

As a result, an increase of KES 800 billion in revenue (a 17 per cent increase from the KES 2.1 trillion budget of the FY 2022/2023) will be recorded.

“We will scale revenue collection by Kenya Revenue Authority to a target of 4.0 trillion over a medium term,” Treasury CS, Njuguna Ndung’u told the MPs.

Where the rubber meets the road, the Ministry of Treasury will undertake tax policies both from the administrative revenue collection and the policy reforms hinged on the tax scheme by the Government.

Recently, the Kenya Revenue Authority (KRA) allocated KES 1.2 billion to hire extra intelligence and enforcement officers who will identify and arrest tax cheats in fresh efforts to raise revenue and cut reliance on borrowing.

During a review of the budget for the year starting in July, the Parliament’s Budget and Appropriations Committee asked the Treasury to provide additional cash for the taxman to hire more employees.

On top of that, the KRA is expected to invest in an automated system integrated with business to ensure there are no leakage and real-time monitoring.

The workforce will bolster revenue collection from new planned levies and pursue tax cheats as the Treasury seeks to raise at least Sh400 billion in additional taxes for the fiscal year starting next month.

“This will allow automatic movement of data and shift to real-time process. This will help seal revenue leakage through tax avoidance and evasion,” said Njuguna.

Meanwhile, as of March this year, KRA tabled KES 1.55 trillion in revenue collection, an amount below the target of KES 3.3 trillion for the financial year.

Revenue collection by the end of November last year recorded a shortfall of Sh19.1 billion presenting a major task for the National Treasury and the Kenya Revenue Authority (KRA) to close the gap.

According to the Latest Economic and Fiscal review by the National Treasury, total revenues by the end of November 2022 amounted to Sh893.8 billion (6.4 per cent of GDP) against a target of Sh912.9 billion (6.5 per cent of GDP).