KRA races against time to bridge Sh1.07 trillion revenue gap
Between July 2024 and February 2025, KRA collected Sh1.4 trillion, which is 56.7 per cent of its annual target of Sh2.475 trillion.
The Kenya Revenue Authority (KRA) is facing the difficult task of collecting Sh1.07 trillion in just four months, following months of missed targets that have put pressure on the government’s revenue plans.
Between July 2024 and February 2025, KRA collected Sh1.4 trillion, which is 56.7 per cent of its annual target of Sh2.475 trillion.
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This leaves the taxman with a shortfall that now requires it to collect at least Sh267.8 billion per month from March to June—an amount significantly higher than its recent monthly average of Sh175.46 billion.
The challenge has been worsened by a decline in collections in January and February, where the tax agency only managed an average of Sh164.8 billion per month. From July to December 2024, the monthly collections had been slightly higher, averaging Sh179 billion. KRA has not publicly responded to questions regarding its failure to meet targets or how it intends to recover in the remaining months.
A report by the Parliamentary Budget Office (PBO) has raised concerns about the trend, noting that revenue performance has dropped from 15.1 per cent of GDP to 14.5 per cent over the past three years. The office also pointed out that several tax measures aimed at increasing collections have not yielded the expected results.
“The revenue heads with the largest reduction include Income Tax, which reduced from 6.9 per cent of GDP in the financial year 2021/22 to 6.6 per cent in 2023/24, and excise duty, which reduced from 2 per cent to 1.7 per cent over the same period,” the PBO report stated.
The report further indicated that KRA’s underperformance over the six months to December 2024 meant that the government was falling behind on its annual revenue targets. Due to the poor performance, the government was forced to revise its initial tax target of Sh2.9 trillion down to Sh2.47 trillion.
Treasury documents for February 2025 show that the government has adjusted its revenue projections for the financial year, estimating ordinary revenue at Sh2.580 trillion, down from an earlier forecast of Sh2.631 trillion.
“Taking into account the ordinary revenue shortfall to December 2024 of Sh93.2 billion, the additional revenue from the Tax Laws (Amendment) Act 2024 and the Business Laws Amendment Act 2024, the total revenue projections to June 2025 have been revised to Sh3,065.2 billion (17.6 per cent of GDP),” Treasury said in a recent statement.
The missed targets have already affected government operations, with delayed disbursements to counties and state agencies. These delays have led to disruptions in salaries and project funding, worsening financial pressures across various sectors.
With only a few months left in the financial year, the KRA faces an uphill task to bridge the gap, as concerns grow over whether the agency can meet its collection target within the remaining timeframe.
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