KRA revenue hits record Sh2.84 trillion as economy strengthens

CHRIS MAHANDARA-KNA

The Kenya Revenue Authority (KRA) collected a record Sh2.844 trillion in taxes and agency revenues during the 2025/2026 financial year, marking its strongest revenue growth in recent years as key sectors of the economy drove higher government earnings.

In a statement issued to the media, KRA said the collections represented an increase of Sh272.95 billion from the Sh2.572 trillion realised in the previous financial year.

This translates to a growth rate of 10.6 per cent, up from 6.8 per cent recorded in 2024/2025.

The authority attributed the strong performance to growth in the manufacturing, energy, financial and insurance services, Information and Communication Technology (ICT), and wholesale and retail trade sectors.

Collectively, these sectors accounted for 62 per cent of total revenue and contribute 27.4 per cent of Kenya’s nominal GDP.

Manufacturing emerged as the largest contributor after generating Sh462 billion in taxes, up from Sh423 billion in the previous year, accounting for 16.2 per cent of total collections.

The energy sector followed with Sh445 billion, largely driven by customs oil taxes, while financial and insurance services contributed Sh320 billion.

ICT generated Sh248 billion, while wholesale and retail trade yielded Sh288 billion, cementing their place among the country’s leading taxpayers.

Despite the strong performance, KRA fell short of its exchequer target after collecting Sh2.568 trillion against a target of Sh2.698 trillion, achieving a performance rate of 95.2 per cent.

Agency revenue collected on behalf of other government institutions rose by 11.2 per cent to Sh276.1 billion, while customs revenue exceeded its target after collecting Sh988.8 billion against a target of Sh980.8 billion, representing a performance rate of 100.8 percent.

Domestic revenue grew by 9.7 per cent to Sh1.851 trillion but fell short of the Sh1.991 trillion target. Among major tax heads, Pay As You Earn (PAYE) collections rose by 6.7 per cent to Sh598.8 billion although KRA attributed the slower growth to shrinking formal sector employment, whose contribution to total employment fell to 15.3 per cent in 2025 from 15.7 per cent in 2022.

Corporation tax registered one of the strongest performances after growing by 14 per cent to Sh347.1 billion, supported by improved profitability in the ICT, manufacturing, transport, energy and banking sectors.

Excise duty on betting services exceeded its target after collecting Sh16.5 billion against a target of Sh14.3 billion, while collections from Significant Economic Presence Tax and Digital Service Tax doubled to Sh1.61 billion following changes introduced under the Finance Act 2025.