The Kenya Revenue Authority (KRA) will cross-check employers' payroll records and scrutinise payments made through mobile money tills as it moves to recover a Sh132.1 billion shortfall in the 2025/26 financial year.

KRA told the National Assembly's Departmental Committee on Finance and National Planning that it collected Sh2.844 trillion against a target of Sh2.977 trillion, or 95.6 per cent of the goal. Collections still grew by 10.6 per cent on the previous year, the highest haul in the authority's history.

Where the money fell short

Pay As You Earn (PAYE) recorded the biggest gap. KRA collected Sh598.8 billion against a Sh652.4 billion target, a deficit of Sh53.6 billion. Value Added Tax (VAT) brought in Sh355.3 billion against a target of Sh383.2 billion, missing by Sh27.9 billion.

The authority blamed changes in tax policy, including PAYE and VAT concessions and changes to customs taxes on oil, as well as disruptions to petroleum cargo shipments linked to the conflict in the Middle East.

The new enforcement push

To close the gap, KRA told MPs it will:

  • Target employers with large outstanding tax liabilities.
  • Cross-check payroll records against third-party data to spot discrepancies and recover unpaid PAYE.
  • Use the government's settlement of pending bills to recover taxes owed by suppliers and employers.
  • Scrutinise payments received through till numbers and Pochi la Biashara to find businesses that receive money but do not declare income.

KRA said it has identified taxpayers with a potential revenue contribution of Sh56.1 billion for targeted compliance action.

On the petroleum side, the authority plans to introduce smart meters and Automatic Tank Gauging Systems to improve the accuracy of fuel quantity declarations at the point of import.

MPs warn against squeezing workers

Committee chairperson Kuria Kimani (Molo) congratulated KRA on the record collection but cautioned against loading more of the burden on salaried Kenyans.

"We do not wish to have to raid payslips of those in formal employment further," Kimani said, adding that the committee expects better performance in the next financial year.

The scrutiny of till numbers is likely to worry small traders, many of whom rely on M-Pesa tills and Pochi la Biashara for daily sales. KRA has not yet said how or when the data checks will begin.

Photos: Kenyans.co.ke; Realt0n12 via Wikimedia Commons (CC BY-SA 3.0). Thumbnail design: HAMASTA MEDIA.