KRA Revenue Hits Record Sh2.84 Trillion as Customs and Digital Reforms Deliver Growth

The Kenya Revenue Authority (KRA) collected a record Sh2.84 trillion in taxes during the 2025/26 financial year, lifting annual revenue by 10.6 percent from the previous year and moving closer to the government’s long-term ambition of consistently raising more domestic resources to fund public spending.

The result marks one of the authority’s strongest annual performances, with customs collections exceeding target and major sectors of the economy posting broad-based growth. Manufacturing remained the largest contributor to tax receipts, while energy, financial services, information and communication, and wholesale and retail trade together accounted for nearly two-thirds of total revenue.

The figures also offer an early indication that KRA’s investment in digital administration, technology-driven compliance and taxpayer facilitation is translating into stronger collections without relying solely on new tax measures.

KRA Closes FY2025/26 With Record Tax Collections

KRA raised Sh2.84 trillion during the financial year ended June 2026, compared with Sh2.57 trillion collected a year earlier.

Revenue collected on behalf of the National Government climbed to Sh2.56 trillion, while agency revenue rose to Sh276.1 billion, reflecting growth across both traditional tax heads and collections made on behalf of other government institutions.

Among the largest contributors were Pay As You Earn (PAYE), which generated Sh598.8 billion, and domestic Value Added Tax (VAT), which reached Sh355.25 billion.

The performance comes after another year in which the authority expanded digital tax administration, strengthened compliance programmes and continued integrating technology into revenue collection.

Manufacturing and Energy Remain Kenya’s Biggest Revenue Contributors

Manufacturing once again led all sectors, contributing Sh462 billion, up from Sh423 billion in the previous financial year.

The sector was followed by energy, which generated Sh445 billion, helped by stronger customs oil taxes.

Financial and insurance activities contributed Sh320 billion, while the information and communication sector generated Sh248 billion. Wholesale and retail trade added Sh288 billion, representing just over ten percent of total revenue.

Together, the five sectors produced roughly 62 percent of all taxes collected during the year.

The concentration illustrates where Kenya’s tax base remains strongest. Large formal businesses continue to account for a substantial share of government revenue, even as policymakers seek to widen compliance among smaller enterprises and businesses operating outside the formal economy.

Customs Exceeds Target After Technology-Led Reforms

One of the year’s strongest performances came from Customs, where collections reached Sh988.78 billion, surpassing the annual target of Sh980.79 billion.

The result stands out because customs has consistently outperformed many domestic tax segments while undergoing extensive operational reforms.

Rather than relying solely on enforcement, KRA has spent recent years redesigning customs processes around automation, risk-based cargo management and greater transparency. The authority has expanded the use of non-intrusive cargo scanners linked to central analysis systems, allowing compliant consignments to move more quickly while directing enforcement resources toward higher-risk shipments. It has also broadened programmes that give trusted traders faster clearance in exchange for stronger compliance standards.

The approach reduces delays for compliant businesses while giving customs officers better visibility into cargo flows and potential revenue leakages. As more transactions move through digital systems, opportunities for manual intervention are reduced, improving both efficiency and accountability.

These operational improvements provide useful context for customs’ ability to outperform its revenue target during the financial year.

Better Compliance, Not Just Higher Taxes, Supported Growth

The headline figures arrive at a time when tax policy has become one of Kenya’s most closely watched economic issues. Businesses and households have faced a succession of tax changes over the past several years, raising questions about whether future revenue growth would depend on introducing new levies or improving compliance with existing ones.

KRA’s latest performance suggests administrative reforms are becoming a larger part of the equation.

The authority attributes stronger collections to tighter compliance measures and continued investment in digital tax administration. Those efforts span electronic filing, risk-based audits, improved data matching and systems designed to make it easier for taxpayers to meet their obligations while helping the authority identify cases of under-declaration and non-compliance.

The strategy also aligns with the direction outlined by KRA’s leadership, which has placed greater emphasis on taxpayer experience alongside enforcement. Technology has been positioned as a tool for simplifying processes, reducing manual interactions and making compliance less burdensome for businesses.

That approach recognises a simple reality. Revenue growth is easier to sustain when more taxpayers comply voluntarily than when collections depend primarily on enforcement actions.

For large businesses, faster processing and more predictable tax administration can reduce compliance costs. For KRA, greater visibility across transactions strengthens its ability to identify revenue leakages without placing additional requirements on compliant taxpayers.

Parliament Curbed Some KRA Powers Even as Revenue Climbed

The revenue results also come against the backdrop of debate over the Finance Bill 2026.

During consideration of the Bill, lawmakers rejected several proposals that would have expanded KRA’s enforcement powers, arguing that some measures required stronger safeguards for taxpayers and businesses.

That creates an important distinction between tax policy and tax administration.

While Parliament chose not to approve every enforcement proposal, KRA still delivered record annual collections. The outcome suggests improvements in administration, technology and compliance can produce measurable gains even without broad new enforcement powers.

It also reinforces a wider lesson for tax authorities. Sustainable revenue growth depends not only on legislation but also on the effectiveness of the systems used to administer existing tax laws.

The Road to Sh3 Trillion Will Depend on Broadening the Tax Base

Despite the record performance, KRA’s work is far from complete.

The authority remains under pressure to increase domestic revenue as Kenya seeks to narrow its fiscal deficit and reduce dependence on borrowing. Reaching and sustaining annual collections above Sh3 trillion will require continued economic growth, stronger compliance and a broader tax base.

One of the biggest opportunities lies among micro, small and informal businesses that remain outside the formal tax system. Bringing more of those enterprises into compliance could generate additional revenue while reducing reliance on the country’s relatively small pool of large taxpayers.

Whether that objective is achieved will depend on balancing enforcement with taxpayer support. Businesses are more likely to comply when registration, filing and payment systems are straightforward, predictable and backed by responsive service.

The 2025/26 results provide evidence that KRA’s investment in digital administration is delivering measurable returns. The next challenge will be maintaining that momentum while expanding compliance across a wider section of the economy, ensuring future revenue growth reflects a broader tax base rather than heavier demands on those already paying their share.

A Practical Guide for Businesses Reviewing Their Cybersecurity

Cyber threats continue to evolve, but businesses do not need to navigate those challenges without reliable information. Understanding how modern attacks work is the first step towards making informed security decisions.

The Kaspersky SMB Cybersecurity Guide examines common attack methods, explains the role of modern endpoint protection and outlines how layered security can help businesses detect and respond to threats more effectively. It is designed for organisations looking to strengthen cybersecurity without adding unnecessary operational complexity.