The Kenya Revenue Authority (KRA) missed its revenue collection target for the 2025/2026 financial year, falling short by KSh 124 billion.
The taxman collected KSh 2.844 trillion against a target of KSh 2.968 trillion, a deficit of 4.2 percent.
Despite the miss, the performance marks a 10.6 percent improvement over the 2024/2025 financial year, when total collections stood at KSh 2.572 trillion. This translates to an absolute year-on-year revenue increase of KSh 272.9 billion.
Five core economic sectors drove 62 percent of total revenue, collectively posting 6.8 percent growth, KRA said. Manufacturing was the single largest contributor, bringing in KSh 462 billion, a 9.2 percent increase from the KSh 423 billion collected the previous year. The energy sector followed closely, posting a 9.1 percent increase to hit KSh 445 billion, a performance heavily supported by oil customs tax collections, which alone accounted for 15.1 percent of the total revenue pool.
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Other sectors also recorded strong growth. The financial and insurance sector rose to KSh 320 billion, compared to KSh 248 billion the previous year. The information and communications technology sector grew 7.9 percent to KSh 248 billion, while wholesale and retail recorded a 10.3 percent increase, contributing KSh 288 billion.
By tax head, corporation tax recorded the largest absolute deficit against its target despite growing 14 percent to yield KSh 60.3 billion. Pay As You Earn grew 6.7 percent to KSh 50.1 billion, missing its target but still achieving a 91.8 percent performance rate. Domestic Value Added Tax expanded 8.5 percent to reach KSh 355.26 billion. Exchequer revenue rose 10.5 percent to KSh 2.568 trillion, while revenue collected on behalf of other government agencies jumped 11.2 percent to KSh 276.1 billion.
KRA noted that policy changes late in the fiscal year heavily altered its momentum. The authority said collection improved significantly between January and April 2026 but was dragged down in the final two months by major tax refunds, triggered by the government’s decision to slash VAT on petroleum products from 16 percent to 8 percent.
Excise duty from betting activities exceeded expectations, achieving a 115.9 percent performance rate against its target after growing 24.9 percent to collect KSh 16.53 billion. Betting and withholding taxes on gaming platforms surged 20.3 percent and 59.2 percent, respectively. In consumer goods, alcoholic beverages dominated domestic excise duties, accounting for 69.3 percent (KSh 61.85 billion) of the total, while tobacco products contributed 14.9 percent.
Looking ahead, KRA plans to deploy technology to seal revenue leakages, optimize collection efficiency and expand the tax bracket. The authority intends to expand electronic invoicing, scale up real time revenue monitoring, set up a Data Analytics Centre of Excellence and integrate artificial intelligence to drive tax compliance. These measures will build on current interventions, including data recovery programs, alternative dispute resolution and intelligence led enforcement, which the taxman credits for keeping revenue steady and supporting the country’s long term economic stability.
By Jonathan Mwinzi
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