Individual income tax collection from employment, rent, business, interests, and dividends grew for the first time by a third since the onset of the Covid-19 pandemic after the government lifted the waiver on payment of the tax by low-income earners.
Data from the National Treasury shows the Kenya Revenue Authority (KRA) collected Sh333.5 billion in the nine months to March, a 33 per cent growth from the Sh251.5 billion the taxman netted during the same period last year.
In 2020, the government introduced a total waiver on income taxes for individuals earning less than Sh24,000 monthly to cushion low-income workers whose salaries had been significantly decimated by the business downturn due to the pandemic.
The government also lowered the turnover tax on small businesses from three per cent to one per cent, value-added tax (VAT) from 16 per cent to 14 per cent, corporation tax, and Pay-As-You-Earn (PAYE) from 30 per cent to 25 per cent.
This is the first time the tax has grown since the pandemic has fallen 19 per cent last year from Sh310 billion collected during a similar period in the financial year 2019/20 owing to the massive job losses and business closures slashed incomes.
The higher individual income tax collection puts the KRA on course to collect its target of a total of Sh435.9 billion of the tax by the end of the financial year in June.
The performance has boosted KRA’s overall revenue collection with the tax agency recording a 22 per cent year-on-year increase in revenue collection in the 10 months to April on the back of a recovering economy from Covid-19 restrictions.
The taxman collected Sh1.45 trillion during that period up from Sh1.19 trillion it collected last year driven by higher collections from excise duty, VAT, and income tax-supported by jobs creation, increased trade, and higher consumption.
KRA targets to collect a total of Sh 834.47 billion from income taxes on both individuals and corporations by the close of the financial year.
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