KRA misses 2025/26 target by KSh132bn, blames PAYE, VAT and oil tax changes

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KRA missed its 2025/26 revenue target by KSh 132.1 billion, collecting KSh 2.844 trillion against a target of KSh 2.977 trillion, or 95.6%. The taxman told the National Assembly Finance and National Planning Committee that changes in oil customs taxes, PAYE and VAT concessions caused most of the gap, according to Capital FM via allAfrica. Collections still grew 10.6% on the previous year, the highest KRA has ever recorded.

Where KRA fell short

• Domestic taxes: KSh 1.851 trillion against KSh 1.991 trillion.
• PAYE: KSh 598.8 billion against KSh 652.4 billion, a KSh 53.6 billion gap.
• Domestic VAT: KSh 355.3 billion against KSh 383.2 billion, a KSh 27.9 billion gap.
• Oil taxes: hit by disruptions to petroleum cargo linked to the Middle East conflict.

How KRA plans to close the gap

KRA says it will recover unpaid taxes through government pending bill payments, focus on major employers and match payroll records against third-party data. For VAT, it plans to fight tax fraud, chase taxpayers with an identified KSh 56.1 billion in potential revenue, and use data from Till Numbers and Pochi La Biashara to find undeclared income. On fuel, it is looking at biofuel sources from Japan, India, Malaysia and Singapore and plans smart meters and automatic tank gauges.

Committee chair Kuria Kimani praised the record collection but said KRA must do better “because we do not wish to have to raid payslips of those in formal employment further.”

If you trade through an M-Pesa till, read how KRA plans to use eTIMS for small traders, and check how PAYE is worked out on your payslip.

FAQ

How much did KRA collect in 2025/26?

KSh 2.844 trillion, 95.6% of its KSh 2.977 trillion target.

Will KRA track M-Pesa tills?

KRA says it will use financial data from Till Numbers and Pochi La Biashara to find undeclared income.

What caused the KRA revenue shortfall?

KRA blames changes in oil customs taxes, PAYE and VAT concessions, plus disruption to petroleum cargo.