KRA targets an extra Sh282bn from large taxpayers

Times Tower

Times Tower in Nairobi, the Kenya Revenue Authority headquarters. 

Photo credit: Dennis Onsongo | Nation Media Group

What you need to know:

  • Large taxpayers are those who accrue an annual income of up to Sh1.3 Billion.
  • Currently, there are 2,089 registered large taxpayers from various sectors of the economy.

The Kenya Revenue Authority (KRA) is targeting an extra Sh282 billion in revenue collection from large taxpayers this year on simplified filing processes.

KRA Commissioner General, Humphrey Wattanga said that the tax man projects to collect Sh1.1 trillion from large taxpayers in the current 2023/2024 financial year, up from Sh818 billion in the previous year.

“At KRA, our commitment is not only to collect taxes but also to support you in upholding compliance, while efficiently contributing to our nation's economic agenda. To facilitate this, we have established a dedicated office for our large taxpayers known as the ‘Large Taxpayers Office’ (LTO), which will continue to engage and partner with you through a relationship management framework” he said.

Large taxpayers are those who accrue an annual income of up to Sh1.3 Billion. Currently, there are 2,089 registered large taxpayers from various sectors of the economy.

Mr Wattanga said that KRA has adopted a personalised tax compliance system to help maximise collections.
KRA remains under pressure to grow its collections amid the slow performance of key economic sectors such as manufacturing.

For instance, tax collections for the first quarter of the current financial year increased at the slowest pace since 2018, excluding the pandemic year, despite the enforcement of new taxation measures by the William Ruto administration.

Latest data by the National Treasury shows that the taxman collected Sh514.26 billion in revenue in the three months through September — representing a 10.55 percent growth over nearly Sh465.20 billion in a similar period a year earlier when taxes increased 11.60 percent.

Analysis showed that the rate of growth was the slowest in five years excluding the pandemic year (2020/21) when the Treasury gave tax reliefs in the first half.

The increment in the first quarter of the 2021/22 fiscal year was 31.21 percent to Sh416.82 billion, largely on the low base effect the previous year when the collections had dipped 14.68 percent on tax reliefs amid pandemic-induced drop in earnings.

This came in a quarter after the KRA started enforcing new taxation measures such as doubled value-added tax (VAT) on fuel to 16 percent and 1.5 percent housing levy that is deducted from the gross pay of all workers, matched by employers.

The enforcement of the housing levy is seen as a form of double taxation on personal earnings as KRA uses the same gross to also deduct Pay As You Earn.

The slowed growth amid new taxes signals tough economic conditions which have saw monthly corporate sales fall in July and September on the back of elevated prices of goods and services amidst largely stagnant pay.

September marked the beginning of the second round of the Ruto administration’s painful taxation measures in Finance Act 2023, collections which will be wired to KRA by the 20th of this month.

These included Export and Investment Promotion Levy on the importation of cement clinker, iron, and steel as well as paper and paperboard and digital assets tax on the online sale of content, music, ebooks, photos, documents, videos, amongst other digital assets.