NAIROBI, Kenya, Nov 8 – Domestic Value Added Tax (VAT) collection plunged by 26.3 percent in October due to reduced remittances from key sectors, the Kenya Revenue Authority (KRA) reported.
The decline resulted in a Sh2.37 billion deficit, attributed to lower contributions from sectors such as Administrative & Support, Electricity, Oil & Gas, Finance, Professional & Scientific, Transport, and Wholesale & Retail Trade, which typically contribute about 33 percent of domestic VAT.
These sectors accounted for 14.7 percent of turnover sales, while inputs showed only a slight growth of 0.5 percent.
Domestic VAT was one of four tax categories under the Domestic Tax Department (DTD) that recorded weak revenue collection in October.
The private sector’s Pay As You Earn (PAYE) remittances also fell short by Sh1.21 billion, mainly due to large taxpayer office (LTO) clients using refunds to offset liabilities and reduced monthly cash payments per employee.
Further, Domestic Excise Duty fell by Sh573 million, impacted by lower remittances from manufacturers of beer, bottled water, tobacco, and soft drinks.
Excise duty on money transfers also declined by Sh728 million, attributed to decreased transaction values in the banking sector.
Non-oil taxes underperformed as well, with a Sh2.87 billion deficit, achieving a 93.7 percent performance rate.
Import duty, Excise duty, VAT, and Import Declaration Fee (IDF) on standard imports saw respective shortfalls of Sh266 million, Sh814 million, Sh2.25 billion, and Sh405 million due to reduced revenue per Twenty-Foot Equivalent Unit (TEU), increased exemptions, and lower non-oil import values.
KRA noted an overall decline in revenue collection from July to October in the current 2024/25 fiscal year. Revenue growth during this period averaged 5.6 percent, down from 11.8 percent in the same period last year.
