KRA likely to miss tax target, says Genghis

The Kenya Revenue Authority is likely to miss its revenue targets in the current financial year on the back of depressed income and corporation tax.

Researchers at Genghis noted capital tax collection in the first half of this financial year rose by a modest 6.63 per cent compared to a similar period a year earlier, lagging behind the Treasury target.

KRA netted about Sh630.37 billion in the July-December period compared to Sh591.17 billion in a similar period in 2016. The taxman will now have to collect nearly Sh134.94 billion monthly between January and June to hit the Sh1.44 trillion full-year target.

“The first quarter period ending September 2017 saw revenues in import duty, excise duty and PAYE segments fall off target,” said Genghis in a macro-economic and fixed income report released on Tuesday.

“Despite revenue collection efforts improving in the last three financial years, we are not optimistic of a better performance in the current financial year,” added the researchers.

READ: Tax collection up 7pc in six months, misses the target

They noted that payroll tax was set to pull down revenue collection while the decision barring the KRA to effect the Excisable Goods Management System (EGMS) stamps on products, including bottled water from last November would deny the taxman additional revenues.

“First the PAYE reforms will depress revenue from the PAYE segment. Secondly, the court order suspending the rollout will dampen excise duty collection,” it said.

The KRA was dealt a blow last October in its quest to widen the tax net after the High Court temporarily suspended plans to rope in non-alcoholic drinks and cosmetics manufacturers.

The income tax reforms also expanded tax bands and increase monthly personal relief (10 per cent in each) from January 1 this year.

The Treasury expects to collect Sh61 billion less than initially planned this fiscal year.