Commerce

KRA records 14% jump in revenue as payroll taxes surge

Friday, May 6th, 2022 04:22 | By
Kenyans queue to file tax returns. Income tax rose 40 per cent showing recovery of lost jobs during the Covid-19 pandemic.

Tax revenues grew by 14 per cent last year helped by a recovery in Pay As You Earn as the easing of Covid-19 restrictions lifted the corporate sector.

Income tax rose 40 per cent showing recovery of lost jobs during the Covid-19 pandemic even as other tax brackets also recovered.

“Total ordinary revenue is estimated to grow by 14.3 per cent to Sh 2,039 billion with Tax revenue accounting for 89.9 per cent of this estimate,” Kenya National Bureau of Statistics said.

Started spending

Taxes from value-added tax grew by 23 per cent as more Kenyans and companies started spending. Excise duty also recovered to grow by 12 per cent. Customs duty rose 5 per cent as trade in foreign products recovered. Other tax categories also grew by 8 per cent.

Data released earlier by Kenya Revenue Authority (KRA) showed that Pay as You Earn (PAYE) — a tax charged on resident and non-resident individuals in employment— rose to Sh221.33 billion compared to Sh205.27 billion in six months to December 2019, representing a 7.8 per cent growth above the pre-pandemic period.

PAYE registered a performance rate of 105.7 per cent in the first half after a collection of Sh221.328 billion against a target of Sh209.339 billion resulting in a surplus of Sh11.989 billion.

The performance was mainly driven by gradual growth in employment and the emanating economic recovery,” KRA stated in the tax revenue performance report for the half-year period 2021/2022.

Kenya is banking on taxation to seal a revenue hole created by the elevated debt levels that have reduced the window for access to international debt markets.

The improving collections come on the back of the recovery triggered by the full reopening of the economy after the lifting of curfew and rollout of Covid-19 vaccines.

This prompted companies to hire new workers or recall those who were suspended.

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