KRA races to raise Sh282b a month to hit target by June next year

Times Tower, KRA headquarters in Nairobi. [File, Standard]

The taxman is racing to collect an average of Sh282.25 billion every month from November through June to meet its Sh3.268 trillion full-year target, calculations from the latest data show.

The Kenya Revenue Authority (KRA) said on Thursday that it had collected Sh1.010 trillion by the end of October, crossing the trillion-shilling mark a month earlier than in prior years.

KRA's October collection alone hit Sh260.63 billion against a target of Sh258.30 billion, a 100.9 per cent performance rate, buoyed by record customs receipts of Sh94.79 billion.

That leaves Sh2.258 trillion to be raised over eight months.

October's collection, the agency's highest monthly collection on record, is Sh21.62 billion short of the required pace.

KRA must exceed its best-ever month by roughly 8.3 per cent every month for the rest of the fiscal year.

October's breakdown shows the tax man collected customs revenue of Sh94.79 billion (101.1 per cent of target), while domestic revenue was Sh165.45 billion (surplus of Sh1.337 billion).

Corporation Tax hit 119.2 per cent of target at Sh23.93 billion; Domestic VAT exceeded target by Sh45 million at Sh33.37 billion, while Domestic Excise posted a Sh945 million surplus.

Treasury's draft 2027 Budget Policy Statement, submitted to Parliament this month, states that ordinary revenue has missed target in nine of the past 11 years, surpassing projections only in FY2021/22.

In the first two months of this fiscal year, ordinary revenue missed by Sh37.8 billion.

By the end of September, the shortfall had widened to Sh58.2 billion.

Over the past four years, total revenue undershot approved targets by an average of Sh152 billion annually, including Sh142 billion in ordinary revenue.

The Treasury warns that continued underperformance "may widen the fiscal deficit and increase the Government's borrowing requirements," raising public debt and future debt service obligations.

The 2027/28 fiscal deficit is projected at Sh1.35 trillion, or 5.9 per cent of GDP, financed by Sh423.8 billion in net external borrowing and Sh929.1 billion in net domestic borrowing. Any revenue miss enlarges that financing requirement.

Debt service already consumes nearly half of ordinary revenue. Interest payments are projected at 42 per cent of ordinary revenues in FY2026/27, up from 14.7 per cent in FY2013/14.

Public debt stands at 65.6 per cent of GDP in present-value terms, above the government's 55 per cent ±5 per cent anchor.

KRA attributes October's performance to non-oil taxes (surplus of Sh7.243 billion, growth of 26 per cent) and above-target collections across Domestic VAT, Domestic Excise, Corporation Tax, Individual Income Tax, Capital Gains Tax and Stamp Duty.

But the agency faces structural limits, the Treasury has documented. Tax expenditures totalled Sh262.6 billion (1.49 per cent of GDP) in 2025, with domestic VAT alone accounting for Sh175.8 billion in forgone revenue.

The budget process concludes by March 2027, ahead of the August elections. Whether KRA can sustain a monthly pace above its historic high through the typically weaker second and third quarters will determine whether the Sh3.268 trillion target holds or whether another downward revision follows.