Nairobi: The Kenya Revenue Authority (KRA) collected a record Sh2.844 trillion in taxes and agency revenues during the 2025/2026 financial year, marking significant growth fueled by key sectors of the economy.
According to Kenya News Agency, this collection represents an increase of Sh272.95 billion from the Sh2.572 trillion collected in the previous financial year, indicating a growth rate of 10.6 percent compared to 6.8 percent in 2024/2025. The growth was driven by the manufacturing, energy, financial and insurance services, Information and Communication Technology (ICT), and wholesale and retail trade sectors, which collectively accounted for 62 percent of total revenue and 27.4 percent of Kenya’s nominal GDP.
Manufacturing was the largest contributor, generating Sh462 billion in taxes, up from Sh423 billion the previous year, and accounting for 16.2 percent of total collections. The energy sector followed closely with Sh445 billion in contributions, primarily driven by customs oil taxes. Financial and insurance services added Sh320 billion, while ICT and wholesale and retail trade contributed Sh248 billion and Sh288 billion, respectively.
Despite the robust performance, KRA fell short of its exchequer target, collecting Sh2.568 trillion against a target of Sh2.698 trillion, achieving a 95.2 percent performance rate. Agency revenue collected on behalf of other government institutions rose by 11.2 percent to Sh276.1 billion, while customs revenue exceeded its target by collecting Sh988.8 billion against a Sh980.8 billion target, representing a 100.8 percent performance rate. Domestic revenue grew by 9.7 percent to Sh1.851 trillion but did not meet the Sh1.991 trillion target.
Among major tax categories, Pay As You Earn (PAYE) collections increased by 6.7 percent to Sh598.8 billion. However, KRA noted slower growth due to shrinking formal sector employment, which contributed 15.3 percent to total employment in 2025, down from 15.7 percent in 2022. Corporation tax saw a strong performance with a 14 percent growth to Sh347.1 billion, aided by improved profitability in the ICT, manufacturing, transport, energy, and banking sectors.
Excise duty on betting services exceeded its target, collecting Sh16.5 billion against a Sh14.3 billion target, and collections from Significant Economic Presence Tax and Digital Service Tax doubled to Sh1.61 billion following changes introduced under the Finance Act 2025.
KRA attributed the improved performance to technology-driven reforms, including the expansion of the Electronic Tax Invoice Management System (eTIMS), which onboarded 750,915 taxpayers by June, integration of iTax with other government systems, and the deployment of artificial intelligence-powered analytics and cargo scanners to prevent revenue leakages.
Debt recovery programs generated Sh144.8 billion, while tax base expansion initiatives brought in an additional Sh9.1 billion. Anonymous reports through the iWhistle platform recovered Sh3.2 billion from tax evasion and fraud cases. The authority also reported enhanced efficiency at ports and border points, reducing average cargo clearance time to 42.3 hours and resolving 993 tax disputes through Alternative Dispute Resolution mechanisms, unlocking Sh35.1 billion.
KRA plans to further digital reforms in the 2026/27 financial year through expanded electronic invoicing, real-time revenue monitoring, and broader use of artificial intelligence to enhance compliance and improve taxpayer experience.
