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REVENUE:  Kenya Revenue Authority (KRA) recorded a dip in earnings from pay as you earn (PAYE) during 2020-21 financial year with tax head declining by 9.3 per cent, despite beating its annual target for the first in eight years.

According to a statement by the taxman the decline was driven by reduction in employment as part of measures taken mainly by private firms to cut operating costs as a result of the Covid-19 pandemic.

The tax head was also affected by the reduction of the top PAYE rate from 30 to 25 per cent in the first half of the year and a 10 per cent tax relief for persons earning below Sh24,000 per month.

However, the dip did not stop KRA from surpassing its full year revenue target in a struggling economy ravaged by Covid-19 pandemic.

The taxman collected Sh1.67 trillion for financial year 2020/2021 surpassing the Sh1.65 trillion target set by the 2021 Budget policy statement by Sh16.8 billion.

The last time KRA surpassed its full year target was in financial year 2013/2014.

The previous financial year (2019/2020), KRA collected Sh1.61 trillion in revenue.

This represents a performance rate of 101 per cent and revenue growth of 3.9 per cent compared to last financial year.

“This performance is consistent with the prevailing economic indicators, especially the prevailing economic indicators especially the projected GDP growth of 0.6 per cent in 2020,” said KRA in the statement.

The taxman attributed the good performance to the success of enhanced compliance enforcement efforts and a widened tax base. Active taxpayers now stand at 6.1 million from 3.94 million three years ago.

Enhanced compliance

“This was largely driven by enhanced compliance enforcement efforts and the implementation of new tax measures focused on ensuring that non-compliant taxpayers pay their dues,” KRA said.

During the period under review, exchequer revenue grew by 2.3 per cent to stand at Sh1.54 trillion up from Sh1.51 trillion collected in Financial Year 2019/2020.

This is a 100.9 per cent rate compared to the Sh1.53 trillion target.

Domestic taxes department collected Sh1.04 trillion, which translates to 99.8 per cent performance, while customs and border control collected Sh624.8 billion which is a 103 per cent performance compared to the Sh606 billion targets.