The Kenya Revenue Authority (KRA) collected a record Ksh2.844 trillion in revenue during the 2025/26 financial year. This included Ksh1.851 trillion in domestic revenue, representing a 9.7 per cent increase over the previous year, although the agency fell short of its Ksh1.991 trillion target.

According to KRA’s revenue performance report released on Friday, July 10, 2026, domestic revenue achieved a 93 per cent performance rate and remained the largest contributor to the country’s total tax collections.

The authority attributed the growth to improved activity across key sectors of the economy, stronger corporation tax collections, sustained PAYE contributions, improved VAT performance during part of the financial year and continued taxpayer participation.

“Performance was supported by activity across key sectors, corporation tax growth, VAT performance during part of the year, PAYE contribution and continued taxpayer participation. Domestic revenue grew by 9.7% to Kshs 1.851 trillion but achieved 93.0% of the target,” KRA noted in its report.

However, KRA noted that domestic revenue performance remained closely tied to local consumption, employment income, company profitability and overall sector performance, all of which were influenced by the broader economic environment.

Corporation tax posts strongest growth

Corporation tax emerged as one of the strongest-performing revenue streams, with collections rising 14 per cent to Ksh347.066 billion against a target of Ksh365.249 billion. KRA said the growth was driven by improved corporate profitability and stronger instalment tax remittances from the ICT, manufacturing, transportation, energy and wholesale sectors.

The five sectors contributed nearly half, or 49.4 per cent, of total corporation tax collections, recording an average 25 per cent growth in instalment remittances. Bank remittances also increased by 11.1 per cent, with banks accounting for 26.1 per cent of total corporation tax collections.

PAYE and VAT maintain steady performance

Pay As You Earn (PAYE) generated Ksh598.807 billion, reflecting 6.7 per cent growth and a 91.8 per cent performance rate. While the growth improved from 3.3 per cent recorded in the previous financial year, KRA noted that collections continued to be affected by the declining share of formal employment, which fell from 15.7 per cent in 2022 to 15.3 per cent in 2025.

Domestic VAT collections reached Ksh355.255 billion, marking an 8.5 per cent increase. KRA reported that performance strengthened significantly between January and April 2026, with gross collections averaging 98 per cent of target and average growth of 15.5 per cent. However, collections slowed in May and June following substantial VAT refunds in the oil sector after the VAT rate was reduced from 16 per cent to 8 per cent.

Betting taxes surpass target

Betting-related taxes exceeded expectations, with excise tax on betting services generating Ksh16.527 billion against a target of Ksh14.261 billion. The tax head achieved a 115.9 per cent performance rate and recorded 24.9 per cent growth, producing a surplus of Ksh2.267 billion.

KRA also reported that withholding tax on betting and gaming grew by 59.2 per cent during the period.

Alcohol and tobacco dominate excise collections

Meanwhile, domestic excise duty collections stood at Ksh61.845 billion, with alcoholic beverages contributing 69.3 per cent of the total while tobacco products accounted for 14.9 per cent, underscoring the significant role of the two sectors in excise revenue generation.