The Kenya Revenue Authority (KRA) has recorded its highest-ever monthly Value Added Tax (VAT) collection, reaching Kshs. 34.552 billion in January 2025. This milestone follows a series of tax reforms aimed at enhancing revenue collection and improving compliance.
According to KRA, this marks the first time in history that VAT revenue has surpassed Kshs. 34 billion, exceeding the previous record of Kshs. 30.636 billion collected in January 2024. The record-breaking collection represents a 12.8% year-on-year increase, driven by improvements in tax administration and economic activity.
KRA had set a VAT collection target of Kshs. 33.995 billion for January 2025. However, the agency outperformed this goal by Kshs. 556 million, achieving a performance rate of 101.6%. This success is largely attributed to reforms such as the VAT Auto-Population of Returns, which streamlines the filing process and improves compliance.
The VAT Auto-Population initiative allows KRA to pre-fill tax returns with data from integrated systems such as iTax, TIMS, eTIMS, and customs business platforms. This digital transformation simplifies the tax filing process for businesses and minimizes errors, increasing efficiency and revenue collection.
The record Kenya VAT Collection was primarily fueled by a surge in remittances from the energy sector, which saw a 121.6% increase in tax contributions from oil marketers. The manufacturing sector also played a significant role, with notable VAT contributions from key industries:
Soft drinks: 115.6% increase
Sugar: 121.5% increase
Wines and spirits: 12.9% increase
Beer producers: 10.5% increase
Tobacco: 9.5% increase
These increases indicate strong demand in the consumer goods sector and improved compliance due to the digitization of tax processes.
KRA’s recent reforms aim to modernize tax collection and reduce the burden on taxpayers. The VAT Auto-Population of Returns has been a game-changer, shifting from manually prepared VAT filings to an automated system integrated with digital platforms.
By leveraging data analytics, KRA has been able to enhance transparency and accuracy in VAT reporting. The authority is also exploring the development of a fully web-based VAT return system and a taxpayer dashboard to provide real-time sales and purchase data.
The strong VAT performance reflects economic resilience and increased consumer spending, despite global financial uncertainties. Analysts suggest that continued reforms and digitization will further improve revenue collection, ensuring that Kenya meets its fiscal targets for the 2024/2025 financial year.
KRA remains committed to enhancing efficiency in tax administration while maintaining a taxpayer-friendly approach. The authority’s push towards automation aligns with Kenya’s broader digital economy goals, which seek to integrate technology into governance and business operations.
KRA’s historic VAT collection of Kshs. 34.552 billion underscores the effectiveness of ongoing tax reforms. With a focus on digital transformation, compliance improvement, and economic growth, Kenya’s tax agency is positioning itself as a model for efficient revenue administration in Africa.
The strong performance sets a positive precedent for the remainder of the financial year, reinforcing confidence in Kenya’s economic policies and fiscal management strategies.
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