Large taxpayers push up revenue collection by 28pc

KRA commissioner general John Njiraini (left) and large taxpayers commissioner Pancracious Nyaga during a press briefing on October 7, 2013. SALATON NJAU 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

Posted  Monday, October 7  2013 at  23:00
IN SUMMARY
Strong growth in revenue from large taxpayers and customs services enabled KRA to exceed the target for the quarter by Sh4.4 billion.
Commissioner General John Njiraini banking on VAT law to end year on a high note by boosting compliance.

The Kenya Revenue Authority increased tax collection by 28.4 per cent in the first quarter of the 2013/14 fiscal year compared to similar period last year.

The strong growth in revenue from large taxpayers and customs services enabled the organisation to also exceed the target for the quarter by Sh4.4 billion.

In absolute terms, the Domestic Tax Department large taxpayers’ office (LTO) collected an extra Sh22.8 billion or 29.0 per cent growth compared to a similar quarter in 2012-13. This amounted to Sh101.3 billion, a little above the first-quarter target of Sh99.5 billion as set by the National Treasury.

The Customs Services delivered the second highest growth in absolute terms with Sh19.4 billion more netted to reach Sh80.9 billion for the quarter, which included the new railway levy. The sector performed better despite the value of imports being 4.8 per cent lower than targeted.

KRA’s improved performance came against the backdrop of a 4.3 per cent growth in real gross domestic product that was lower than the targeted 5.9 per cent.

Inflation and the Kenya shilling exchange rate, both of which affect tax performance, were however, stable, meaning they did not influence the collections either way. For example, in times of a depreciated exchange rate and higher inflation collections tend to rise in nominal terms.

Petroleum taxes rose by 24.7 per cent while trade collections were up by 34.6 per cent. Consumption-related taxes (indirect) were up 26.9 per cent while revenues from fees and licences increased by 22.6 per cent.

KRA Commissioner General John Njiraini said the bigger growth in the first quarter compared to a similar quarter in the last fiscal year was partly a result of the fact that collections were from a lower base in 2012/13 when Customs Services for example expanded by only 1.7 per cent and VAT was up by only two per cent.

“There has been marked improvement resulting from enhanced compliance interventions in VAT. We have also seen increased import volumes raising petroleum taxes,” said Mr Njiraini.

There has been a trend of importers declaring goods attracting low duty while they have actually imported high-duty goods. KRA has made some inroads in addressing the problem, resulting in the higher amounts collected through the customs services.

“Movement in import patterns towards higher-duty goods due to enhanced compliance interventions has paid off,” said Mr Njiraini.

Training

The KRA boss was speaking at a breakfast meeting with the Press at the organisation’s offices on Monday.

Mr Njiraini said KRA has already recruited 50 people out of a planned 300 with a view to sending them to the field to ensure compliance with excise tax. They are being trained ahead of deployment in two months.

Activation of a new excise duty management system with “track and trace” capabilities has been completed and has been in use in large supermarkets.