Members of the public being served at the new Kenya Revenue Authority (KRA) Malaba Service Center during its official opening at Malaba Border on October 11, 2024.
The Kenya Revenue Authority (KRA) has tabled a budget of Sh57 billion even as it demanded that Parliament amend the law to peg its annual budget to at least two percent of the annual revenue targets set by the National Treasury.
The authority, which has been allocated Sh27.89 billion in the financial year starting July 1, 2025, decried the nil allocation for development, saying the entire budget is for recurrent expenditure.
Mr Humphrey Wattanga, the KRA commissioner general, told the National Assembly’s Finance and National Planning committee on Saturday, May 24, 2025, that there is a need for intervention to unlock the current budget ceiling for the KRA.
“The provisional funding works out to a funding rate of 1.04 percent, which is lower than the total National Treasury funding for financial year 2024/25 of Sh32.18 billion, or 1.29 percent, and the required budget funding of 1.29 percent," Mr Wattanga said.
"The total deficit against the budget submitted in January 2025 is Sh24.13 billion, excluding donor projects is Sh24.28 billion, comprising recurrent (Sh24.13 billion) and development (Sh5.47 billion).
He said the reduction against the financial year 2024/25 revised budget is Sh4.28 billion.
Mr Wattanga told the committee chaired by Molo MP Kuia Kimani that staff costs, contractual services, miscellaneous operations, capital projects, and development expenditure are key funding challenges facing the authority.
“The current payroll after factoring in the contracted annual increments for 2024/25 amounts to Sh24.31 billion, excluding new recruitment in the financial year,” Mr Wattanga said.
“The authority also requires an additional 5,092 staff as per the approved establishment to deliver on the target,” he said.
“The gap is being filled in a phased approach, and the number targeted in the financial year 2025/26 is 1,300 at a cost of Sh3.6 billion.”
Mr Wattanga said the existing contracted services costs of Sh11.14 billion include system maintenance contracts, licenses and utilities, scanner licensing and maintenance, E-seals, office space rental leases, security, medical expenses, insurance, and requirements for the expanded operations and additional staff.
He said that inadequate funding had resulted in the withdrawal of services, pending bills, and contacted defaults and that there was a need for critical provisions for the procurement of critical items such as scanners for critical entry and exit points.
“On capital development projections of Sh5.47 billion, the expenditure needs focus on facilitating staff with adequate office space, a conducive work environment, motor vehicles, computers, furniture, and equipment for effective work performance and high productivity,” the KRA said.
The Molo MP said that although the KRA revenue performance has fallen short of target, there is an improvement of 6.5 percent compared to last financial year; the passage of the Tax Laws Amendment Act, 2024, in December should have helped to raise additional revenue given that the Finance Bill, 2025, was shelved following the Gen-Z protests.
"You said that the Tax Laws Amendment Act, 2024, that we passed in December, has led to a reduction in domestic taxes, with the key concern being PAYE. It has, however, led to relief for salaried Kenyans. My biggest concern is that big government institutions are paying salaries and not remitting statutory deductions, including pay-as-you-earn (PAYE) and withholding tax (WHT),” Mr Kimani asked Mr Wattanga.
“What are you doing to ensure that government institutions take the lead to remit PAYE and WHT even as you clamp down on private entities that are not remitting statutory deductions?"
Mr Wattanga asked the committee to enhance funding for development expenditure by Sh3.7 billion to finance its ambitious technology, innovations, and digitisation to enhance compliance and tax base expansion.
He, however, told the committee that it requires adequate funding for revenue mobilisation, operations and maintenance, capital expenditure (CAPEX), technology, and systems to facilitate delivery of the mandate.
He said the KRA is seeking to mordenise and automate its revenue collection
The KRA asked Parliament to finance its digital transformation agenda that seeks to net more taxpayers into the tax bracket.
Mr Wattanga. revealed that the KRA has since collected Sh2.263 trillion against a cumulative target of 2.39 trillion, resulting in a shortfall of Sh129 billion a month to the close of the current financial year.
He told the National Assembly's Finance and National Assembly's Finance and National Planning Committee that the taxman had raised Sh2.263 trillion as of May 22, 2025.
