Kenya’s tax collections grew 2.89 percent to Sh1.58 trillion in the nine months to March 2025, Treasury data shows, marking the worst year-on-year performance in more than a decade excluding the pandemic period.
The growth from Sh1.54 trillion in a similar period last year came in a year when the Kenya Revenue Authority (KRA) has largely been focusing on expanding the taxpayer base and leveraging technology to catch tax cheats following the withdrawal of the tax bill.
It marked the second time in at least a decade that taxes grew at a single-digit rate in the review period—the other being the period to March 2023 when receipts grew 8.59 percent to Sh1.39 trillion.
This analysis, however, excludes the financial year 2020-21 financial year when tax receipts dropped 7.40 percent to Sh1.04 trillion in the nine-month period ending March 2021, hit by one-off tax reliefs and shutdowns to contain the spread of Covid-19.
The reduction in collections this financial year ending June has seen the Treasury slash the full-year tax target for KRA by Sh344.49 billion from the original estimates of nearly Sh2.75 trillion to the current goal of Sh2.4 trillion.
The Treasury has cited the withdrawal of some new and higher tax measures, as well as a general slowdown in economic performance due to the deterrent cost of borrowing and piling up of pending bills to government suppliers and contractors for the downward revision of tax revenue targets.
KRA, however, still faces the tough task of collecting Sh821.29 billion in three months to June to meet the revised target. This will mean netting a monthly average of collection of Sh273.76 billion in the last quarter, which usually posts the best performance due to final quarterly instalments from banks.
Tax collection averaged Sh175.49 billion per month in the nine months to March 2025, falling short of the Sh200.06 billion monthly target on a pro-rata basis.
The Parliamentary Budget Office (PBO), a think-tank that advises lawmakers on fiscal and budgetary matters, reckons that rejection of the Finance Bill 2024 gave the Treasury a chance to expand the tax base rather than burdening individuals and firms already in the tax net.
"Rather than relying on the introduction of new tax policies that are likely to create new tax burdens on Kenyans, the government may focus on improving tax administration through better enforcement of current tax policies, enhanced data analytics, and increased use of technology to simplify tax processes and improve tax compliance," PBO said in its latest review of the country's taxation plan.
The KRA’s enforcement unit has enhanced the use of various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as aircraft.
Car registration details are also being used to smoke out individuals who are driving high-end vehicles but have little to show in terms of taxes remitted. Kenya Power meter registrations are also helping the taxman to identify landlords, some of whom have been slapped with huge tax demands.
“KRA is investing in resources to collect and analyse intelligence to identify and address tax evasion schemes. Companies and individuals that deliberately evade taxes are subject to investigations and potential prosecution,” Commissioner for Large and Medium Taxpayers Department Rispah Simiyu told the Business Daily earlier this financial year.
“Both third-party and internal data are used to identify businesses that are not adhering to tax laws. Audits and compliance checks are conducted to address non-compliance. The KRA is also exploring integration opportunities with key stakeholders to enhance the effectiveness of information use for improving tax compliance.”
