Kenya Revenue Authority (KRA) saw a surge in Value Added Tax (VAT) collections posting Sh34.552 billion in the month of January, as the taxman began the second half of the 2024/2025 financial year on a strong, leveraging the energy sector.

It said VAT surpassed its January target of Sh33.995 billion by Sh556 million, achieving a performance rate of 101.6 per cent compared to a similar period in financial year 2023/2024.

The energy sector saw a 121.6 per cent increase in remittances from oil marketers, the manufacturing sector also contributed to the positive performance, with notable increases in remittances from producers of beer 10.5 per cent, soft drinks 115.6 per cent, tobacco 9.5 per cent, sugar 121.5 per cent and wines & spirits at 12.9 per cent.

“This positive revenue performance is attributed to several reforms, including the implementation of VAT Auto-Population of Returns, which has contributed to enhanced revenues,” KRA said in a statement.

The auto-populated VAT return is basically a streamlined filing process where KRA pre-fills VAT returns with tax information from iTax, TIMS, eTIMS, and the customs business systems, a process that simplifies VAT return filing, improves compliance, and enhances the customer experience.

The initiative represents a paradigm shift from manually preparing VAT returns through data analysis to pre-populating them with integrated data from KRA’s digital platforms, easing the burden on VAT registered taxpayers.

According to KRA, the reforms reflect its ongoing commitment to simplifying tax processes, as it simultaneously explores the potential of a fully web-based VAT return system and a taxpayer dashboard to provide real-time views of sales and purchases for each taxpayer. “These continued reforms will enhance transparency, efficiency and reduce the cost of compliance for taxpayers while enhancing revenue performance,” it added.

Prior to this, KRA also boasted of a Sh82.554 billion revenue collection from businesses in the exports and imports league in January alone against a target of Sh74.43billion.

It attributed this to Customs and Border Control reforms that saw the second half of the 2024/2025 financial year record an upward trajectory, by collecting a surplus of Sh8.116 billion, reflecting a performance rate of 110.9 per cent.

The performance represented a 27 per cent growth compared to the 4.8 per cent growth in the first half of the financial year 2024/2025, July- December 2024, period. “This positive revenue performance is attributed to reforms within Customs, including the establishment of the Centralized Release Operations,” KRA explained in the statement.

“Under this new process, release officers are stationed at a centralized location and allocated customs declarations randomly for release. This approach has significantly resulted in a more objective release process: managing risks and improving revenue mobilisation efforts.”