KRA posts strong growth in tax collection

Kenya Revenue Authority (KRA) increased its tax collection significantly in the 2025/26 financial year, registered 10.5 per cent growth to post Sh2.568 trillion compared to Sh2.323 trillion the previous year.

This was a 95.2 per cent performance on exchequer revenue against a target of Sh2.698 trillion for the year, with key sectors of the economy reporting strong growth.

Total collections, including various levies and charges on behalf of other government rose by Sh90 billion, with the taxman saying this was a result of a change of strategy to tax administration efforts over hikes.

The KRA data shows Sh2.844 trillion was collected in the period ended June 30, 2026, compared to a target of Sh2.754 trillion for ordinary revenue as contained in the 2025-26 budget.

“The Kenya Revenue Authority (KRA) collected KES 2.844 trillion, representing an increase of Sh272.953 billion over the Sh2.572 trillion collected in FY 2024/2025. The strong performance underscores sustained growth in domestic revenue mobilisation despite a challenging operating environment,” reads a statement from KRA.

Being the first full year revenue performance after a chaotic 2024/2025 financial year associated with the June 25, 2024 Gen Z protest, the government’s change of tact to tax administration over hikes seems to be taking shape.

After the June 2024 chaos associated with the Finance Bill 2024, that had more punitive tax measures among them 2.5 per cent motor vehicle tax, the President William Ruto administration opted for more mellow revenue raising measures through tax administration and expanding the pool of taxpayers.

The June 25, 2024, Gen Z led Finance Bill protest led to the deaths of over 60 peaceful protesters. Without a Finance Act, 2024, as President Ruto was pressured not to sign the bill into law, Finance Act, 2025, covering the 2025/2026 financial year, became the first revenue raising strategy after the 2024 chaos.

The statement lists five key sectors that accounted for approximately 62.0 per cent of total revenue. These are, namely: manufacturing; energy; financial & insurance; information & communication, and wholesale & retail trade remained the country’s leading drivers of government revenue.

These sectors, which account for 27.4 per cent of overall nominal gross domestic product (GDP), recorded an aggregate revenue growth of 8.0 per cent.

“In particular, the energy sector registered a 9.1 per cent revenue growth with a collection of
Sh445 billion, largely driven by good performance of customs oil taxes,” says KRA in the statement. “The sector contributed 15.6 per cent of overall revenue that KRA collected for FY 2025/2026.”

The manufacturing sector recorded a revenue growth  of 9.2 per cent after registering collections amounting to Sh462 billion, compared with Sh423 Billion collected in the previous period.

The key taxes accounting for 74.6 per cent of this collection are Value Added Tax (VAT), Pay As You Earn (PAYE), excise, and corporation tax.

“The sector contributed 16.2 per cent of the overall revenue collected for FY 2025/2026,” said KRA.

The financial & insurance sector accounted for 11.3 per cent of KRA revenue for the FY 2025/2026 with collections of Sh320 Billion, compared with Sh311 Billion collected in the previous FY.

“Corporation tax accounted for 34.8 per cent of collections in the sector, with a further 47.1 per cent attributable to withholding income tax and PAYE,” the statement adds.

Revenue from ICT sector grew by 7.9 per cent as KRA collected Sh248 Billion in the period, compared with Sh230 Billion in the previous financial year.

The sector’s contribution to the total revenue was 8.7 per cent with significant revenue contributors for the sector included being excise (Airtime & financial services), corporation tax, domestic VAT and PAYE.

“The wholesale & retail trade sector accounted for 10.1 per cent of the total revenue collected in FY 2025/2026, yielding Sh288 billion. This represents a growth of
10.3 per cent, compared to the Sh261 billion collected in the previous financial year,” the statement says.