Kenya’s tax revenue growth “impressive”

The growth of Kenya's tax revenue as a percentage of Gross Domestic Production (GDP) over the past five years has been impressive, a report released on Tuesday said.


According to the Kenya Revenue Analysis Report 2010-2015, Kenya’s tax collection as a percentage of GDP increased from 20 percent in 2010/2011 to 29 percent in 2014/2015.

When compared with other economies within the Low Middle Income (LMI) category, Kenya performs impressively,” said the report that was undertaken by the Institute of Certified Public Accountants of Kenya (ICPAK).

The report noted that on average low-income nations have tax revenues equivalent to about 11 to 15 percent of GDP.

Kenya’s revenue grew from 6.5 billion U.S. dollars in 2010/2011 to 10.1 billion dollars in the 2014/2015 financial year, representing a 44-percent increase.

The report notes that as the nation embarks on capital intensive development, it will need to strengthen its capacity to raise revenue.

The key source of taxes includes income tax, Value Added Tax (VAT), excise taxes, custom duties as well as taxes collected as appropriations in aid.

The study showed that Kenya’s revenue portfolio is heavily dependent on direct taxes given that income tax contributes a significant proportion of the overall tax revenue.

The research further indicates that while income tax has increased on a yearly basis, corporate taxes have been decreasing.

“There is a possibility that the fiscal policies put in place to provide tax incentives to foreign corporation are reducing corporate tax collections,” it said.

The report urges Kenya’s tax authorities to implement best global practices in the area of tax incentives in order to avoid eroding the tax base. Enditem

Source: Xinhua/

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