The Kenya Revenue Authority offices in Nairobi. FILE
By GEOFFREY IRUNGU,
In Summary
- The Kenya Revenue Authority beats half-year collection target set for the 2013/14 financial year.
- KRA collected Sh600 million more than the Sh470.2 billion target set for it by the Treasury in the first six months of the financial year.
The taxman has hit the half-year revenue
collection target, helping to calm the Treasury’s nerves ahead of the
expected sale of a Eurobond slated for the first quarter of the year.
The Kenya Revenue Authority (KRA) Tuesday
announced that it had collected Sh600 million more than the Sh470.2
billion target set for it by the Treasury in the first six months of the
2013/14 financial year.
“Strong VAT growth driven partly by new legal
provisions and tighter enforcement of valuation procedures focusing on
risk-prone cargo were among the factors that contributed to the improved
performance,” said KRA Commissioner-General John Njiraini while
speaking to the press at their Times Tower headquarters on Tuesday.
The higher revenue collection will help to calm
the Treasury’s nerves as it seeks to convince international investors to
back its Sh172 billion ($1.5 billion to $2 billion) sovereign bond.
The 2013/14 national Budget of Sh1.6 trillion had a
deficit of Sh330 billion that was to be partly financed from the sale
of the international bond in addition to domestic borrowing.
KRA’s full-year target is Sh973.5 billion, with Sh502.7 billion more expected to be raised between January and June.
“We see KRA’s performance as a positive thing
because the government will have more money to spend to achieve
development expenditure targets, especially given that we are also
raising funds through the sovereign bond,” said Eric Musau, a research
analyst at Standard Investment Bank.
The Jubilee government has lined up multi-billion
dollar projects under the Vision 2030 development blueprint as well as
its campaign manifesto, such as the free laptops for school children and
irrigation of one million acres of land.
Revenue growth in the first half of the fiscal
year was driven by increases in customs duty collection by 28.8 per cent
to Sh168.5 billion against a target of Sh163.7 billion.
Domestic taxes rose by 21.3 per cent to Sh300.5
billion, though this was slightly lower than the Sh304.5 billion
provided in the 2013/14 Budget. Improved corporate tax installment
remittances in September and December 2013 also contributed to the
growth in revenue.
In the first half of the year, there was an
increase in value added tax (VAT) for customs driven partly by the new
legal provisions implemented from last September.
But growth in domestic VAT payments was slower as
companies which had tax credits were exempted from paying until they
exhaust them.
However, the VAT performance could have been
better if it were not for suspected under-valuation of some goods —
previously zero-rated by traders who were out to ensure they paid low
VAT to maintain their profit margins.
“Investigations reveal possible undervaluation of
previously zero-rated imports especially computers and mobile phones.
Possible motives include attempts to maintain previous market prices.
Ongoing interventions are focusing on risk profiled imports and
importers,” said Mr Njiraini
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