Sh84 billion target miss: Inside KRA's Sh10.2b daily collection headache

The Kenya Revenue Authority (KRA) collected Sh84 billion less than planned in the first nine months of the current financial year.

This leaves it with a daunting Sh932 billion to raise in the final three months (April, May and June) to meet its annual target, official data showed on Tuesday. 

Between July 2025 and March this year, KRA said it collected Sh2.038 trillion, falling short of its target of Sh2.122 trillion, a performance rate of 96.1 per cent. 

The shortfall poses a considerable challenge to President William Ruto's reorganised administration and its ambitious economic plans, with just 18 months to the general elections.  

For the full financial year ending June 30 this year, the authority aims to collect Sh2.97 trillion. That means it must raise Sh932 billion in just 91 days, from April 1 to June 30 this year.   

The first three quarters of the financial year run from July to March (nine months total). The final quarter runs from April to the end of June. 

To achieve its Sh2.97 trillion target by the end of June, KRA needs to collect roughly Sh310.7 billion each month over the next three months.  

That is 37 per cent higher than the Sh226 billion monthly average it managed over the previous nine months.

Daily, the agency must bring in about Sh10.24 billion every single day, including weekends and public holidays. 

Analysts note, however, that collecting more than Sh10 billion every day, nearly double the ordinary pace, will be extremely difficult while households and businesses continue to face elevated costs and subdued demand. 

The shortfall was recorded despite the KRA’s recent aggressive tax collection efforts. 

The authority admitted that revenue performance was delivered “within a still-constrained macroeconomic environment marked by subdued household purchasing power, soft consumer demand, elevated business costs, and continued global trade uncertainty.” 

It further cited “revenue mobilisation being impeded by impacts from some of the above factors,” while noting that certain economic indicators provided a positive counterbalance.  

The economy grew at a faster pace of 4.9 per cent in the third quarter of 2025, compared to 4.2 per cent a year earlier. Inflation stood at 4.4 per cent in March 2026, driven by food and transport price increases. 

“With one quarter remaining in the financial year, KRA remains firmly focused on intensifying compliance interventions, sustaining growth momentum, and closing the remaining gap toward the annual target of Sh2.97 trillion,” the taxman said. 

Any further substantial miss could compel the government to seek alternative financing or revise its spending plans. 

The missed targets come at a critical time for the Ruto government, which has been pushing for aggressive tax reforms and collections to fund its development agenda and reduce reliance on borrowing.  

The continued struggle to meet revenue goals could exert further pressure on public services and potentially lead to new austerity measures. 

The considerable deficit in tax collection raises concerns about the government's ability to finance its planned expenditures for the current fiscal year, analysts said.  

Despite the headwinds, KRA recorded 11.4 per cent year-on-year growth, up from Sh1.829 trillion collected in the same period of the 2024-25 financial year. 

Domestic taxes remained the largest contributor at Sh1.301 trillion, representing 10.4 per cent growth. Customs and Border Control exceeded its own target with a 100.9 per cent performance rate, delivering Sh733.7 billion, a 13.3 per cent increase. 

Agency revenue collected on behalf of other government entities amounted to Sh204.45 billion, a 10.7 per cent rise, while exchequer revenue for the National Treasury stood at Sh1.834 trillion, reflecting 11.5 per cent growth but missing its target with a 95.5 per cent performance rate. 

To bridge the remaining shortfall, KRA says it has rolled out several compliance measures, including the eTIMS electronic invoice system, a WhatsApp filing service powered by an AI chatbot called “Shuru,” body-worn cameras for customs officers, and a bank agent model to reach taxpayers without physical KRA offices.  

The authority also introduced USSD-based services accessible by dialling *222#5# for taxpayers without smartphones. 

With domestic revenue falling short, Kenya may be forced to increase its borrowing from both local and international markets to bridge the gap.  

This reliance on debt could exacerbate the country’s already growing public debt burden, potentially leading to higher debt servicing costs and diverting funds from crucial development projects. 

Increased borrowing could also have broader economic implications, including upward pressure on interest rates, which could affect private sector investment and growth.  

Furthermore, a higher debt profile might impact Kenya's credit rating, making future borrowing more expensive and potentially deterring foreign direct investment.