Corporate income tax misses 9 billion shillings target

0


[ad_1]

Economy

Corporate income tax misses 9 billion shillings target


People walking past the National Treasure building in downtown Nairobi. PHOTO | EVANS ENABLED | NMG

BDgeneric_logo

Summary

  • New data released by the Treasury showed the Kenya Revenue Authority (KRA) received Sh 89.78 billion in quarterly installments from companies during the reporting period, against a target of Sh 98.84 billion.
  • Corporate and business tax revenues have resisted an outperforming trend in the current fiscal year ending June 2022.

Corporate income taxes for the first quarter ended September 2021 missed the Treasury’s target of 9.06 billion shillings, in part due to global supply chain constraints that squeezed profits, knocking over the trend of revenue collections.

New data released by the Treasury showed the Kenya Revenue Authority (KRA) received Sh 89.78 billion in quarterly installments from companies during the reporting period, against a target of Sh 98.84 billion.

Corporate and business tax revenues have resisted an outperforming trend in the current fiscal year ending June 2022.

Ordinary revenues exceeded the target by 3.93 percent to 441.79 billion shillings, according to treasury data, signaling an improvement in the efficiency of the tax administration.

For example, payroll taxes exceeded Treasury targets from 6.01 billion shillings to nearly 105.7 billion shillings during the period July-September 2021, indicating a resumption of hiring, the removal of wage cuts. and the recall of workers who were on unpaid leave at the height of the pandemic.

The resulting increase in disposable income also stimulated the collection of value added tax (VAT) which exceeded the target of Sh 7.78 billion to reach Sh 120.38 billion and the revenues of the excise duties which exceeded the target of 1.99 billion Sh to reach 58 Sh. 43 billion.

Philip Muema, partner at Andersen Kenya, a tax and business consultancy, said most companies grapple with endless global supply chain constraints that have slowed recovery from pandemic shocks to profits .

“We are not seeing such large increases in corporate tax compared to PAYE, VAT and excise duties, because businesses – whether they are SMEs, multinationals and other entities – have not fully resumed. As a result, taxes on installments have been reduced, ”Muema said.

“The challenges of the global supply chain are such that sometimes we don’t have containers to bring goods in. If you look at the companies that import goods and even the hawkers on the streets, we don’t have enough goods from China and that is corporate income and corporate taxes.

Corporate tax revenue, however, rose 12.65 percent from the same quarter last year, but the growth was eclipsed by that of the PAYE (47.71 percent), from VAT (44.93 percent) and excise (23.39 percent).

Disruptions in global supply chains, especially at major ports in China and the United States, have increased shipping spending, exacerbating pricing pressures from companies amid rising global oil prices for non-oil producing countries like Kenya.

“The constraints of the global supply chain, although they have been relaxed, remain operational, limiting production, production, etc., and putting upward pressure on prices,” said the governor of the Central Bank of Kenya, Patrick Njoroge, December 1.

[email protected]

[ad_2]

Share.

Comments are closed.