Kenya Revenue Authority (KRA) defied Covid-19 economic hurdles to surpass revenue collection target for the first three months of the financial year by almost 10 per cent.
According to the National Treasury’s statement of actual revenues and net exchequer issues published in the latest Kenya Gazette, the revenue agency collected Sh426.3 billion in taxes in a period between July 1 and October 30 against the annual target of h1.56 trillion.
Its quarterly target is Sh390 billion, meaning it surpassed the first quarter target by Sh36 billion or 9.2 per cent.
The taxman has in recent times changed tact, adopting softer collection methods like tax dispute resolution compared to its past hardline approach that led to resistance and high numbers of tax cheats.
Early this month, the tax agency said that its Alternative Disputes Resolution (ADR) department recorded 100 per cent growth, resolving 118 cases in the first three months of the year compared to 59 same time last year.
In a statement, the tax agency’s legal department said the average time taken to resolve tax disputes equally dropped to 23 days from an average of 60 last year.
The Tax Procedures Act provides that disputes under the ADR framework should be resolved within 90 days.
KRA received 408 disputes between March to September 2020 at ADR, compared to 310 cases during the same period in 2019.
Last year, the division collected Sh25.8 billion from 652 disputes it had with taxpayers in and out of court.
“This not only represents an excellent performance but also confirms that taxpayers have embraced ADR as opposed to other dispute resolution mechanisms such as litigation processes,’’ KRA commissioner for legal services Paul Matuku said.
The agency recorded a slight 1.7 per cent jump in revenue collection for the financial year 2019/20 despite a struggling economy ravaged by the Covid-19 pandemic in the last quarter.
Revenue collected between July 2019 and June 2020 reached a new high of Sh1.607 trillion, compared to Sh1.580 trillion collected in the same period in 2018/19.
This represented a performance rate of 97.9 per cent compared to the last financial year.
The good collection by KRA for the first three months is likely to see Parliament decline National Treasury’s proposal to lower revenue targets for the domestic revenue collector as indicated in the latest 2020 Budget Review and Outlook Paper.
Treasury Cabinet secretary Ukur Yatani has asked lawmakers to slash domestic revenue collection targets this financial year and instead increase borrowing to Sh1 trillion to bridge the wide budget deficit.
“In this regard, revenue projections for 2020/21 have been revised, taking into account the outcome of 2019/20 where revenue falls short of the target by Sh131.2 billion, “Treasury said.
This, it says, resulted from the containment measures against Covid-19 on economic activities and tax relief measures implemented to cushion citizens against the adverse impact of the pandemic and increase liquidity.
Generally, the Treasury received Sh783.8 billion in total revenue in the first three months of the year compared to the annual target of sh2.83 trillion, reflecting a positive collection trend.
The exchequer is expected to receive an average of Sh700 billion to hit the Sh2.8 trillion target.
Meanwhile, the Treasury sent Sh 664.3 billion to the national government during the period under review compared to Sh2.4 trillion estimated for the year.
Counties have so far received Sh78.43 against the annual expectation of Sh386.6 billion.