Kenya's tax collections reached a new record in the 2025/26 financial year after the Kenya Revenue Authority (KRA) collected Sh2.844 trillion, marking its strongest annual growth in recent years on the back of improved compliance and tax administration.
The authority said the amount represented a 10.6 per cent increase from the Sh2.572 trillion collected in the 2024/25 financial year, translating to an additional Sh272.9 billion. The growth was higher than the 6.8 per cent recorded in the previous financial year.
Exchequer revenue rose by 10.5 per cent to Sh2.568 trillion, while agency revenue increased by 11.2 per cent to Sh276.1 billion.
KRA also surpassed its customs revenue target after collecting Sh988.8 billion against a target of Sh980.8 billion, achieving a performance rate of 100.8 per cent. Domestic revenue reached Sh1.851 trillion, equivalent to 93 per cent of the target for the financial year.
According to the authority, the strong performance was driven by sustained growth in key sectors of the economy and improved tax compliance.
Manufacturing, Energy, Financial and Insurance, Information and Communication Technology (ICT), and Wholesale and Retail Trade accounted for about 62 per cent of the total revenue despite contributing 27.4 per cent of the country's nominal Gross Domestic Product (GDP).
Manufacturing remained the largest contributor after generating Sh462 billion, reflecting a 9.2 per cent increase from the previous financial year.
The Energy sector followed with Sh445 billion, posting a 9.1 per cent increase, largely supported by customs taxes on petroleum products.
Financial and Insurance activities generated Sh320 billion, while Wholesale and Retail Trade contributed Sh288 billion after recording growth of 10.3 per cent. The ICT sector collected Sh248 billion, representing a 7.9 per cent increase.
Other sectors that also posted notable growth included Transport, Construction and Real Estate.
Corporation Tax recorded the highest growth among the major tax heads, increasing by 14 per cent to Sh347.1 billion.
Pay As You Earn (PAYE) collections rose by 6.7 per cent to Sh598.8 billion, while Domestic Value Added Tax (VAT) increased by 8.5 per cent to Sh355.3 billion.
Excise Duty on betting services reached Sh16.5 billion after growing by 24.9 per cent, exceeding the annual target with a performance rate of 115.9 per cent.
Revenue collected through the Significant Economic Presence Tax (SEPT) doubled to Sh1.6 billion following the expansion of its scope under the Finance Act 2025.
KRA said digital technology continued to strengthen tax administration and improve compliance during the year.
The authority attributed the improved performance to wider adoption of the Electronic Tax Invoice Management System (eTIMS), integration of iTax, iCMS and IFMIS platforms, use of artificial intelligence analytics, deployment of non-intrusive cargo scanners, pre-populated tax returns and real-time monitoring of betting firms.
Other measures that supported revenue collection included debt recovery, which realised Sh144.8 billion, use of alternative dispute resolution mechanisms, expansion of the tax base and improved cargo clearance, with the average clearance time reduced to 42.3 hours.
The record revenue collection came during a period when Kenya's economy expanded by 4.6 per cent in 2025, supported by a stable exchange rate, improved private sector credit and increased imports.
Looking ahead, KRA said it plans to expand electronic invoicing, establish a Data Analytics Centre of Excellence, deploy more artificial intelligence tools, introduce Virtual Electronic Tax Registers and widen digital taxpayer services, including Ushuru GPT.
The authority thanked compliant taxpayers for their continued support, saying their contribution remains critical in financing the country's development programmes.