The Kenya Revenue Authority (KRA) missed its tax collection target for the first half of the current financial year by Sh152.2 billion, underscoring mounting pressure on public finances.
Treasury disclosures show the taxman collected Sh1.161 trillion in the six months to December 2025, falling short of the Sh1.314 trillion required to stay on track of its Sh2.627 trillion annual target.
The shortfall means the KRA achieved 88.4 percent of its half-year benchmark, widening concerns over the government’s ability to fund operations without deeper borrowing or further spending cuts.
The miss comes at a delicate point for Treasury officials, who are grappling with elevated debt servicing costs and limited room to raise new taxes after sustained public resistance.
While the KRA posted year-on-year growth in collections, the pace remained insufficient to meet Treasury’s ambitious revenue assumptions underpinning the current budget.
The KRA’s performance in the first six months mirrors a pattern seen in the previous financial year, when the taxman also fell short of its mid-year goal.
In the half-year ended December 2024, the KRA missed its half-year target by Sh163.46 billion after raising Sh1.07 trillion against a required Sh1.23 trillion.
That earlier miss was largely attributed to the rejection of the Finance Bill, 2024, which forced the government to abandon several proposed tax measures.
Although no comparable legislative shock occurred this year, revenue mobilisation has continued to face headwinds.
Historically, collections tend to pick up in the final months of the fiscal year, driven by corporate tax payments.
The Sh2.627 trillion annual target represents one of the most aggressive revenue goals in recent years.
Failure to close the gap is set to deepen the country’s fiscal deficit, forcing the government to rely more heavily on borrowing or delay planned development spending.
Domestic borrowing has already intensified in recent years, raising concerns about crowding out private sector credit.
At the same time, external borrowing options have narrowed as Kenya grapples with high debt levels and stricter conditions in international capital markets.
The Parliamentary Budget Office (PBO) has previously cautioned against over-reliance on new taxes as a strategy for boosting revenue.
Instead, the office has urged the government to focus on strengthening tax administration and compliance.
‘Rather than relying on the introduction of new tax policies that are likely to create new tax burdens on Kenyans, the government may focus on improving tax administration through better enforcement of current tax policies, enhanced data analytics and increased use of technology to simplify tax processes and improve tax compliance,’ the PBO said in a past review.
The KRA has in recent years invested heavily in digital systems, including electronic invoicing and data matching tools aimed at widening the tax net.
Despite these efforts, compliance remains uneven, particularly among small and informal businesses that form a large share of the economy.
The President William Ruto-led Kenya Kwanza administration has repeatedly pledged to stabilise public finances while protecting development spending.