Kenya Revenue Authority (KRA) collected KES 2.844 trillion in total revenue during the 2025/26 financial year, achieving 95.2% of its annual target as improved performance in customs, corporation tax and digital tax collections supported growth.
The KRA revenue collection increased by 10.6% year-on-year, representing an additional KES 273 billion compared with the previous financial year. The growth was supported by stronger tax compliance measures, expansion of the tax base, enhanced enforcement initiatives and increased adoption of digital tax systems. KRA’s performance comes as the Kenyan government continues efforts to strengthen domestic revenue mobilisation, reduce reliance on borrowing and improve fiscal sustainability.
KRA Revenue Collection Breakdown for FY2025/26
Exchequer revenue, which forms the largest share of government tax collections, rose by 10.5% year-on-year to KES 2.568 trillion, achieving 95.2% of the set target. Agency revenue increased by 11.2% to KES 276.1 billion, reaching 99.1% of the annual target, supported by improved collections from government agencies and other revenue streams. Domestic revenue grew by 9.7% to KES 1.851 trillion, although it achieved 93% of the target during the period.
Customs revenue emerged as one of the strongest contributors, increasing by 12.4% year-on-year to KES 988.8 billion and surpassing its target by achieving 100.8%. Customs collections benefited from higher revenue generated from both petroleum and non-petroleum imports. Oil customs taxes generated KES 370.38 billion, exceeding the target by achieving 102.6% performance. Non-oil customs revenue reached KES 618.40 billion, representing 99.8% of the target.
Average cargo clearance time also improved during the financial year, falling to 42.3 hours from a target of 43.15 hours, as KRA expanded technology-driven customs processes and streamlined border operations.
Corporation Tax and PAYE Support Domestic Revenue Growth
Corporation tax recorded strong growth during the period, rising by 14% year-on-year to KES 347.1 billion, equivalent to 95% of the target. The increase was supported by improved compliance among businesses and stronger tax administration measures targeting corporate taxpayers.
Pay As You Earn (PAYE) collections increased by 6.7% to KES 598.8 billion, achieving 91.8% of the target. PAYE remains one of the largest sources of domestic tax revenue, reflecting employment income contributions from Kenya’s formal sector. Domestic VAT collections rose by 8.5% to KES 355.3 billion as businesses continued adopting electronic tax compliance systems.
Betting Excise and Digital Taxes Record Significant Growth
Excise taxes from betting services recorded notable growth, increasing by 24.9% year-on-year to KES 16.5 billion and exceeding the target by 115.9%. The sector generated KES 2.27 billion above the projected excise target, while withholding tax collections from betting and gaming activities increased by 59.2%. Digital taxation also recorded substantial growth, with collections from Digital Service Tax and Significant Economic Presence Tax doubling to KES 1.61 billion from KES 807 million previously.
Alcohol and Tobacco Lead Domestic Excise Contributions
Domestic excise collections reached KES 61.8 billion during FY2025/26. Alcoholic beverages accounted for the largest share of domestic excise revenue at 69.3%, while tobacco products contributed 14.9%. The performance comes amid continued government efforts to balance revenue mobilisation with measures aimed at controlling consumption of products associated with health and social costs.
Tax Debt Recovery and Compliance Measures Increase Collections
KRA recovered KES 144.82 billion through tax debt collection initiatives during the financial year as the authority intensified efforts to improve compliance among taxpayers. Alternative Dispute Resolution (ADR) mechanisms resolved 993 cases, unlocking KES 35.06 billion in disputed tax revenue.
The authority also expanded the tax base, generating KES 9.1 billion through registration of new taxpayers and conversion of nil and non-filers into active taxpayers. Anonymous reports submitted through the iWhistle platform resulted in the recovery of KES 3.2 billion from 908 cases involving suspected tax non-compliance.
Manufacturing, Energy and Financial Services Remain Top Tax Contributors
The manufacturing sector remained Kenya’s largest contributor to tax collections, generating KES 462 billion during the financial year. The energy sector followed with KES 445 billion, while financial services contributed KES 320 billion.
KRA Expands Digital Tax Compliance Through eTIMS
KRA continued expanding digital tax administration through the electronic Tax Invoice Management System (eTIMS), onboarding 750,915 taxpayers by June 2026. The system forms part of broader efforts to improve invoice verification, reduce tax leakages and enhance transparency in business transactions. The authority is also scaling up technology adoption across tax administration through data analytics, automation and real-time monitoring solutions.
KRA’s Revenue Strategy for FY2026/27
For the 2026/27 financial year, KRA plans to deepen reforms focused on improving compliance, modernising tax systems and enhancing taxpayer experience. The authority will expand electronic invoicing coverage and increase real-time revenue monitoring through Electronic Tax Registers. It will also introduce measures such as device identification and registration, alongside an exchange of information system aimed at addressing tax evasion risks, including cross-border tax challenges.
KRA will continue strengthening digital service delivery through expanded online platforms and innovative solutions. The authority also plans to establish a Data Analytics Centre of Excellence, implement revenue assurance frameworks and increase the use of artificial intelligence in tax administration. These initiatives are expected to support higher voluntary compliance, improve revenue performance and strengthen Kenya’s tax system as the country seeks sustainable economic growth and fiscal stability.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.