According to the Ministry of Finance’s report on the performance of the economy, the administrative difficulties associated with the effective implementation of the digital tax tracking system, combined with lower than expected consumption of alcoholic beverages such as beer, spirits , wines and beverages other than beer, affected tax collection in February.
In details contained in the February report, the Ministry of Finance noted that tax collections were below target due to shortfalls in excise duties and value added tax (VAT) resulting from difficulties in correct implementation of some digital tracking systems and difficulties encountered in the role. outside of the electronic receipt and invoicing system.
“The collection of indirect domestic taxes has been affected by the underperformance of excise duties and VAT. The collection of excise duties has been affected by administrative difficulties related to the effective implementation of the digital tracking system, coupled with lower than expected consumption of items such as beer, spirits, wines and beer-like beverages. Similarly, VAT collections have been affected by difficulties in rolling out the electronic receipt and invoicing system,” the report says, noting that in February, tax collection shortfalls amounted to 86.06 billion. shillings.
During the period, tax revenue and subsidies were below target, reaching 1,672 billion shillings against 1,836 billion shillings forecast.
Tax revenue amounted to 1,540 billion shillings, which was below the target of 1,630 billion shillings, while subsidies recorded a shortfall of 96.29 billion shillings.
During the period, the Ministry of Finance reported that domestic revenue stood at 1,662 billion shillings against the planned target of 1,730 billion shillings due to a shortfall in tax and non-tax revenue.
According to the report, tax revenue amounted to 1,548 billion shillings while 113.68 billion shillings came from non-tax revenue sources.
However, the Ministry of Finance indicated that despite an upturn in economic activity, tax collections continue to fall short of target because “some of the administrative tax measures proposed in the budget of the exercise have not been effectively implemented as previously planned”. ”.
Direct domestic tax collections amounted to 426.47 billion shillings against the planned target of 458.08 billion shillings due to shortfalls in withholding tax, tax on government bonds and Treasury, flat tax and rental income tax.
However, the report noted that there was a surplus in the pay-as-you-go (PAYE) segment due to a recovery in private sector employment following the full reopening of the economy in january.
Taxes on international trade also registered a surplus, realizing Shs 711.02 billion during the period against a planned target of Shs 684.79 billion due to surpluses collected on oil duties, in particular on gasoline, import duties on textiles and VAT on imports of iron and steel.
According to the Ministry of Finance, in February the government spent 2.306 billion shillings but fell short of the planned 3.332 billion shillings due to a lower than expected amount.
However, payments for salaries and wages exceeded forecast at 479.23 billion shillings against 467.83 billion shillings forecast due to additional payments to the education sector for teachers after schools reopened in January. 2022.
On the other hand, government expenditure on non-salary recurrent activities amounted to 698.28 billion shillings against 824.7 billion shillings planned, while expenditure on domestically financed development activities was lower than planned. , coming in at 516.7 billion shillings against 1,112 billion shillings forecast.