Key Sectors Push Revenue to KES 2.8 Trillion as KRA Records Strongest Growth in Recent Years

Revenue collection for the Financial Year 2025/2026 registered a robust double-digit growth of 10.6%, significantly outperforming the 6.8% growth recorded in the previous financial year.

The Kenya Revenue Authority (KRA) collected KES 2.844 trillion, representing an increase of KES 272.953 billion over the KES 2.572 trillion collected in FY 2024/2025. The strong performance underscores sustained growth in domestic revenue mobilisation despite a challenging operating environment.

Five key sectors of the economy accounted for approximately 62.0% of total revenue. Manufacturing; Energy; Financial & Insurance; Information & Communication, and Wholesale & Retail Trade remained the country’s leading drivers of government revenue. These sectors that account for 27.4% of overall nominal GDP (raw economic metric not adjusted for inflation or deflation) recorded an aggregate revenue growth of 8.0%.

 

Sector-by-Sector Breakdown

• Energy Sector: Registered a 9.1% revenue growth with a collection of KES 445 Billion, largely driven by good performance of Customs oil taxes. The sector contributed 15.6% of overall revenue that KRA collected for the FY 2025/2026.

• Manufacturing Sector: Recorded a revenue growth of 9.2% after registering collections amounting to KES 462 Billion, compared with KES 423 Billion collected in the previous FY. The key taxes accounting for 74.6% of this collection are Value Added Tax (VAT), Pay As You Earn (PAYE), Excise, and Corporation Tax. The sector contributed 16.2% of the overall revenue collected for the FY 2025/2026. Inputs to the sector in terms of raw material imports (food & beverages and industrial non-food supplies) accounted for 49.0% of the overall import value in the FY 2025/2026.

• Financial & Insurance Sector: Accounted for 11.3% of KRA revenue for the FY 2025/2026 with collections of KES 320 Billion, compared with KES 311 Billion collected in the previous FY. Corporation Tax accounted for 34.8% of collections in the sector, with a further 47.1% attributable to Withholding Income Tax and PAYE.

• Information & Communication Technology Sector: Grew by 7.9% after KRA collected KES 248 Billion in the FY 2025/2026, compared with KES 230 Billion collected in the previous FY. The sector’s contribution to the total revenue was 8.7%. Significant revenue contributors for the sector included Excise (Airtime & Financial Services), Corporation Tax, Domestic VAT and PAYE among others.

• Wholesale & Retail Trade Sector: Accounted for 10.1% of the total revenue collected in FY 2025/2026, yielding KES 288 Billion. This represents a growth of 10.3%, compared to the KES 261 Billion collected in the previous FY.

 

 

Revenue Performance for FY 2025/26

1. Exchequer Revenue

The Exchequer Revenue grew by 10.5% after a collection of KES 2.568 Trillion compared to KES 2.323 Trillion collected in the previous financial year. This translates to a performance rate of 95.2%, against a target of KES 2.698 Trillion.

2. Agency Revenue

Beyond its core tax collection mandate, KRA also collects various levies and charges on behalf of other government agencies. In FY 2025/26, the Agency Revenue grew by 11.2% after KRA collected KES 276.139 Billion compared to KES 248.276 Billion collected in the previous financial year. This translated to a performance rate of 99.1%, reflecting KRA’s growing capacity to efficiently collect agency levies.

3. Customs and Domestic Revenue Performance

• Customs Revenue: Recorded a performance rate of 100.8% with a collection of KES 988.780 Billion against a target of KES 980.794 Billion. This translates to a revenue growth of 12.4%, compared to the same period in FY 2024/25. This is attributable to good performance of oil and non-oil revenue streams, which collected KES 370.383 Billion (performance rate of 102.6%) and KES 618.397 Billion (performance rate of 99.8%) respectively.

• Domestic Revenues: Registered a growth of 9.7% after a collection of KES 1.851 Trillion against a target of KES 1.991 Trillion. This translates to a performance rate of 93%.

4. Performance of Key Tax Heads

• Pay As You Earn (PAYE): KRA collected KES 598.807 Billion from PAYE, signifying a growth of 6.7% and a performance rate of 91.8%. While this is an improvement compared to a growth of 3.3% recorded in FY 2024/25, it is still lower than average growth of 8.5% recorded in FY 2022/23-2023/24. This performance is affected by the shrinking contribution of formal sector employment to overall employment from 15.7% in 2022 down to 15.5% in 2024, and 15.3% in 2025 (Economic Survey 2026).

• Domestic VAT: Domestic VAT collection stood at KES 355.255 Billion, reflecting a growth of 8.5% compared to the previous year. In January to April 2026, gross domestic VAT performance against target averaged at 98.0% with a growth of 15.5%. This was an improvement compared to the performance recorded in the first half of the FY when the tax head recorded an average growth of 8.5% and a performance rate of 92.4% against the target. It is important to note that between May and June 2026, taxpayers within the oil sub-sector accrued substantial refunds following policy change on applicable VAT rate from 16% down to 8%.

• Corporation Tax: Corporation Tax has maintained steady growth, with FY 2025/26 recording a 14.0% growth compared to 9.8% in FY 2024/25 and 4.6% in FY 2023/24. For the period under review, collection stood at KES 347.066 Billion against a target of KES 365.249 Billion. About half (49.4%) of Corporation Tax in FY 2025/26 was collected from five sectors, including ICT, manufacturing, transportation, energy and wholesale. These sectors recorded average growth of 25.0% in instalment remittance, supported by improved profitability by both private and public sector firms. Additionally, remittance from banks grew by 11.1% in FY 2025/26 and accounted for 26.1% of total collections.

• Betting Taxes: Excise Tax on betting services surpassed the target after registering a surplus of KES 2.267 Billion with a performance rate of 115.9%. The tax head collected KES 16.527 Billion against a target of KES 14.261 Billion and registered a growth of 24.9%. Betting Tax and Withholding Tax on betting and gaming also registered respective growths of 20.3% and 59.2%.

• Domestic Excise: The tax head recorded a collection of KES 61.845 Billion in FY 2025/26. Domestic excise from alcoholic beverages (beer, wines & spirits) accounts for 69.3% of overall domestic excise with a further 14.9% being realised from tobacco products.

• Significant Economic Presence Tax (SEPT)/Digital Service Tax (DST): Collections for the tax head doubled to KES 1.609 Billion in FY 2025/26 compared to KES 0.807 Billion collected during the same period in the previous FY. SEPT applies to non-resident persons earning income from services provided through a digital market place in Kenya. The Finance Act 2025 expanded the scope of SEPT to cover income earned through the internet or any electronic network. It further eliminated the threshold of KES 5 Million that was initially in application.

Revenue Mobilisation Strategies

1. Technology Adoption

KRA continues to leverage modern technology to enhance efficiency, transparency and effectiveness in revenue collection. These innovations are part of KRA's broader digital transformation and tax modernisation strategy to improve compliance, reduce leakages and enhance taxpayer experience.

 

• eTIMS Expansion: Enhancement and expansion of the Electronic Tax Invoice Management System (eTIMS) to strengthen transaction visibility and improve VAT compliance. As at June 2026, a total of 750,915 taxpayers had on-boarded.

• System Integration: Through the integration of key systems such as iTax and the Integrated Customs Management System (iCMS), KRA has enhanced visibility of transactions across both domestic and customs operations, strengthening data sharing and compliance monitoring.

• Pre-populated Tax Returns: This facilitates the implementation of initiatives such as pre-populated tax returns, which reduce errors and opportunities for non-compliance by automatically incorporating data from independent third-party sources, including electronic invoicing systems. This has made the filing process more accurate, transparent, and convenient for taxpayers.

• Revenue Leakage Sealing: Significant progress in sealing of revenue leakage through non-intrusive cargo scanners and AI-powered analytics, which have strengthened detection of illicit trade and non-compliance.

2. Simplification of Processes

To improve taxpayer experience, KRA has launched a number of simplified solutions that have improved compliance. Some of these solutions include pre-populated returns, WhatsApp chatbot, USSD service (*222#), which has made it easier for taxpayers to register, file returns and pay taxes, making compliance faster and user-friendly.

KRA has also rolled out the eCustoms mobile application, which has reduced the cost of compliance among cross-border traders by making clearance processes seamless and user-friendly.

3. Service Excellence

To improve service excellence, KRA has also strengthened offline support by expanding its presence at the grassroots level through the Ushuru Mashinani programme. Through this model, the Authority has partnered with agents who provide services on behalf of KRA. As at 30th June 2026, KRA had partnered with 1,261 agents countrywide.

In addition, KRA has strengthened direct engagement with taxpayers through county-based Citizen Assembly forums held across the country. These forums provide taxpayers with an opportunity to raise concerns, provide feedback and contribute ideas that could improve processes.

4. Other Revenue Collection Measures

KRA has put in place numerous measures aimed at boosting compliance, broadening the tax base and streamlining revenue collection processes. The measures play a complementary role in strengthening KRA’s capacity to meet its revenue targets, while fostering a more efficient and taxpayer-friendly environment. These include:

• a. Tax Base Expansion (TBE): This aims to on-board taxpayers previously not paying taxes and convert inactive taxpayers into active taxpayers. The programme enabled KRA to collect KES 9.1 Billion in revenue. Some of the initiatives under TBE include recruitment of landlords through the (Block Management System - BMS), conversion of nil and non-filers through the use of third-party data, recruitment of additional taxpayers and provision of additional tax obligations based on their income among others.

• b. Taxation at Source: Through this programme, KRA has integrated with other systems, allowing for an almost real-time collection of information and revenue directly at the source. Some of the interventions under this measure include:

  • Integration of KRA tax systems with the Integrated Financial Management Information System (IFMIS): The integration of IFMIS with iTax and introduction of the 0.5% Withholding Income Tax on supplies of goods to Government has significantly enhanced KRA's visibility over Government procurement transactions. Beyond the traditional VAT withholding and other withholding tax streams, KRA now receives real-time information on these supplies, while the corresponding withheld taxes are remitted directly through iTax. This integration has strengthened visibility of supplier transactions, broadened the tax base, and enhanced tax compliance across the Government supply chain.

  • Integration of Betting and Gaming Companies into KRA tax system: The integration has given KRA real-time access to 143 companies in the gaming and betting sector. This enabled Excise Tax on betting services to surpass the FY 2025/26 target.

• c. Debt Collection: KRA enhanced collection from debt management programmes on non-compliant taxpayers, mobilising a total of KES 144.824 Billion in FY 2025/2026. This performance is attributable to follow-ups on demand notices and the debt instalment plans agreed upon with taxpayers.

• d. Trade Facilitation: In its commitment to enhancing efficiency and reducing cargo clearance times, KRA has strengthened the capabilities of the Integrated Customs Management System (iCMS) to support pre-arrival processing using the Bill of Lading as the primary document for customs declarations. Additionally, KRA has rolled out the e-Customs mobile application to reduce the cost of compliance and make customs and tax processes more accessible, convenient and user-friendly. Other measures include introduction of Body-Worn Cameras that have reinforced professionalism, transparency and service excellence. These initiatives have yielded significant efficiency gains in trade facilitation, with the average cargo clearance time reducing to 42.30 hours, surpassing the target of 43.15 hours.

• e. Dispute Resolution Framework: KRA uses the Alternative Dispute Resolution (ADR) framework as a trade facilitation mechanism by ensuring amicable resolution of tax disputes, as opposed to protracted legal processes. For the period under review, 993 cases were concluded, enabling release of KES 35.062 Billion. This demonstrates KRA’s commitment to promoting compliance through non-adversarial mechanisms.

• f. Anonymous Reporting: KRA continues to seal revenue leakages through a combination of technology-driven solutions, intelligence-led enforcement, and multi-agency collaboration. A key initiative is the implementation of iWhistle, a secure web-based platform that enables members of the public to anonymously report incidents of corruption, tax evasion, and other forms of tax fraud. This has facilitated collection of KES 3.2 Billion from 908 cases reported anonymously. In addition, the Authority has enhanced the profiling of high-risk taxpayers and tax evaders through data analytics and intelligence-led compliance interventions.

 

Long-Term Objectives

In the Financial Year 2026/27, KRA is focused on building on these achievements by deepening reforms to further strengthen compliance, modernise systems and enhance taxpayer experience.

Planned interventions include expansion of electronic invoicing and scaling up of real-time revenue monitoring through Electronic Tax Registers. Additional measures such as device identification and registration, as well as development of an exchange of information system will be implemented to address tax evasion, including cross-border risks.

KRA will also enhance service accessibility through expanded digital platforms and innovative solutions. Plans are also underway to strengthen operational efficiency through technology-driven interventions, including the establishment of a Data Analytics Centre of Excellence, implementation of revenue assurance frameworks, and expanded use of artificial intelligence.

These measures amongst others, will enhance revenue performance, voluntary compliance, taxpayer experience and create a more efficient and transparent tax system. This is envisioned to support sustainable economic growth, macroeconomic stability and improved livelihoods for all Kenyans.

 

Conclusion

Despite the mixed economic environment in FY 2025/2026, taxpayers exhibited resilience and voluntarily paid their taxes to support the country’s economic transformation.

On behalf of the KRA Board of Directors and staff, I appreciate all Kenyans for remaining committed to honouring their tax obligations, which plays a key role in Kenya’s economic sustainability and development.

KRA remains committed to simplifying tax payment processes and ensuring a positive taxpayer experience. KRA emphasizes its unwavering dedication to upholding integrity and professionalism in all interactions with taxpayers.

 

COMMISSIONER GENERAL, KENYA REVENUE AUTHORITY






 

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