KRA defies headwinds to beat tax target, collects Sh2.6 trillion
By Noel Wandera, July 11, 2025Kenya Revenue Authority (KRA) defied economic headwinds to collect Sh2.571 trillion in the 2024/2025 financial year, surpassing its Sh2.555 trillion target.
This represents a 6.8 per cent increase over the previous year’s Sh2.407 trillion, despite challenges such as subdued trade volumes, weak credit growth, and fiscal uncertainty. The performance rate was 100.6 per cent.
Notably, the period’s gross domestic product (GDP) growth of 4.7 per cent, driven by agriculture, financial services, transportation, and real estate, supported KRA’s revenue growth.
Lending rates
However, the first half of the year was characterised by economic turbulence, including the shelving of Finance Bill 2024, increased bank lending rates, and limited import performance.
“Numerous economic headwinds… impacted revenue negatively,” KRA said in a statement released yesterday.
During the review period, import values showed minimal growth of just 0.04 per cent, hindered by a 16.4 per cent decline in fuels and lubricants and a 14.6 per cent contraction in food and beverage imports. Export earnings also fell by 2 per cent, with key sectors such as tea and horticulture experiencing double-digit decreases. The taxman’s performance was anchored on steady gross domestic product (GDP) growth, lower inflation, a stronger shilling, and improved tax compliance across key sectors.
Agriculture, finance, transport and real estate posted notable gains, while fuel prices dropped following lower global oil prices, boosting business recovery and consumer activity.
“The revenue growth for the period under review was attributed to implementation of a number of measures, including taxation of the digital economy, tax base expansion, debt collection and anti-corruption initiatives,” KRA stated.
Despite these constraints, customs revenue rose sharply to Sh879.3 billion — beating target — while domestic taxes grew modestly to Sh1.688 trillion. Exchequer revenue reached Sh2.323 trillion, marking a strong close in a year where credit access was tight and the Finance Bill 2024 was shelved.
KRA’s ability to exceed its target was driven by reforms and tech-led enforcement. The rollout of the Electronic Tax Invoice Management System (eTIMS), adoption of artificial intelligence to detect fraud, and faster cargo clearance through the Centralised Release Office were key milestones.
“In particular, overall import values recorded weak growth of 0.04 percent, affected by drop in import values of fuels and lubricants, and food and beverages which recorded declines of 16.4 and 14.6 per cent respectively,” KRA noted in its revenue report, highlighting external trade pressures that threatened customs collections.
Corporation tax grew by nearly 10 per cent, supported by profits in manufacturing, ICT, real estate and retail sectors. Betting taxes also surpassed target, following real-time integration of 141 firms into KRA systems. VAT collections rebounded in the second half, helped by tougher registration and filing checks.
Tobacco manufacturers
Not all areas performed strongly. Excise duty underperformed due to reduced remittances from beer and tobacco manufacturers. Still, agency revenues reached Sh248.3 billion — beating target by over Sh40 billion.
Digital economy taxation stood out, raising Sh14.3 billion from global tech firms — a 32 per cent rise from last year. KRA also recovered Sh141.3 billion from debt collection, and another Sh29 billion through its tax amnesty programme.
Though private sector credit shrank by 1.1 per cent, public borrowing grew, and inflation eased to 3.6 per cent. These macro shifts offered mixed signals for revenue prospects, but the tax agency pulled off a 9.1 per cent revenue surge in the second half.
KRA recorded a 79 per cent on-time filing rate, a sign that more Kenyans are engaging with the tax system. As it marks its 30th anniversary, the authority is now focused on scaling up automation, data integration and taxpayer services to push collections even higher.
From Sh122 billion in 1995 to over Sh2.5 trillion today, KRA’s evolution signals the growing role of technology and strategy in sustaining Kenya’s fiscal base.