National Treasury aims to increase revenue collection to KES 2.8 Trillion in the 2023/24 financial year by integrating the Kenya Revenue Authority’s (KRA) tax system with telecommunications companies and the informal sector, as well as implementing rental income tax measures.
KRA is set to implement systems to monitor mobile money transactions, payments in the informal sector, and rent payments by mapping rental properties in order to expand its tax base.
The 2023/24 Budget Policy Statement includes measures to expand the tax base in order to increase revenue collection and fund the projected budget of KES 3.641 trillion.
President William Ruto’s administration has placed a focus on expanding the tax base, with a goal of increasing the number of individuals and businesses paying taxes.
The President has also directed the Kenya Revenue Authority (KRA) to follow in the success of Safaricom’s M-Pesa, which has 30 million active users compared to the 7 million individuals with KRA pin numbers.
The fact that this opportunity remains unclear to KRA demonstrates why radical changes are necessary. Safaricom, a telco, has registered more people than KRA, a powerful state organization. It is very clear that the magic lies in technology and strategy, not power and resourcesWilliam Ruto
Data from the Central Bank of Kenya shows that the value of mobile money transactions increased by 15.2% in the 11 months leading up to November of last year.
As part of tax policy reforms, the Treasury has also tasked the KRA with reducing the gap in Value Added Tax (VAT) collections by fully rolling out the electronic Tax Invoice Management System (eTIMS).
The new automated registers will enable the KRA to receive sales and invoice data on a daily basis, which will help curb tax evasion and boost revenue collections.
Additionally, KRA plans to implement measures at Customs and Border Control to increase revenue per unit through technology and improved data analysis.
Revenue performance will be underpinned by the on-going reforms in tax policy and revenue administration measures geared towards expanding the tax base.Treasury
This is an indication that for the 2023/24 financial year, the government of Kenya is projecting overall nominal expenditure and net lending to total KES 3.64 trillion, with recurrent expenses (such as salaries and operating costs) accounting for KES 2.42 trillion (14.9% of GDP) and development expenses (such as infrastructure projects) accounting for KES 796.4 billion (4.9% of GDP).
The projected fiscal deficit (which includes grants) for 2023/24 is KES 695.2 billion (4.3% of GDP), compared to an estimated overall fiscal balance of KES 849.2 billion (5.8% of GDP) in the previous financial year.
The fiscal deficit in FY 2023/24, will be financed by net external financing of Sh198.6 billion (1.2 percent of GDP), and net domestic borrowing of Sh496.6 billion (3.0 percent of GDP)Treasury