MANUFACTURING, energy, financial and insurance, information and communication, and wholesale and retail trade remained the country’s leading drivers of government revenue in 2025-26, Kenya Revenue Authority now says.
These sectors, which account for 27.4 per cent of overall nominal GDP (raw economic metric not adjusted for inflation or deflation), recorded an aggregate revenue growth of eight per cent.
This, as the five key sectors pushed revenue to Sh2.8 trillion, with KRA recording one of the strongest growth in collections in recent years.
Revenue collection for the financial year 2025-2026 registered a robust double-digit growth of 10.6 per cent, significantly outperforming the 6.8 per cent growth recorded in the previous financial year.
KRA collected Sh2.844 trillion, representing an increase of Sh272.953 billion over the Sh2.572 trillion collected in 2024-2025.
“The strong performance underscores sustained growth in domestic revenue mobilisation despite a challenging operating environment,” Commissioner General Adan Mohamed said.
Manufacturing remained the country's single largest contributor to tax collections after generating Sh462 billion, up from Sh423 billion a year earlier.
The sector recorded a 9.2 per cent growth and contributed 16.2 per cent of KRA's total collections.
KRA attributed the strong performance to higher collections from Value Added Tax (VAT), Pay As You Earn (PAYE), Excise Duty and Corporation Tax, which together accounted for nearly three-quarters of taxes paid by manufacturers.
The authority has also noted that imports of industrial and food manufacturing inputs accounted for 49 per cent of Kenya's total import value during the financial year, highlighting the sector's central role in economic activity.
The energy sector followed closely, generating Sh445 billion, a 9.1 per cent increase from the previous year. It contributed 15.6 per cent of total revenue, with KRA attributing the growth largely to improved collections from customs oil taxes.
Financial and insurance services ranked third after contributing Sh320 billion, equivalent to 11.3 per cent of total collections.
Corporation Tax accounted for 34.8 per cent of taxes paid by the sector, while Withholding Tax and PAYE jointly contributed another 47.1 per cent.
Wholesale and retail trade generated Sh288 billion, a 10.3 per cent increase from the previous year's Sh261 billion, with the sector contributing 10.1 per cent of KRA's overall revenue.
Revenue from the ICT sector rose 7.9 per cent to Sh248 billion, accounting for 8.7 per cent of total collections.
“Excise duty on airtime and financial services, Corporation Tax, Domestic VAT and PAYE remained the major tax streams supporting the industry's performance,” KRA notes.
Beyond the sectoral performance, KRA reported that Exchequer revenue, the amount transferred to the National Treasury for government expenditure, grew by 10.5 per cent to Sh2.568 trillion, representing 95.2 per cent of the annual target of Sh2.698 trillion.
Revenue collected on behalf of other government agencies also recorded strong growth, increasing 11.2 per cent to Sh276.1 billion, reflecting improved efficiency in collecting levies and other statutory charges.
Customs revenue surpassed its annual target after collecting Sh988.8 billion, achieving 100.8 per cent of the target and growing by 12.4 per cent compared to the previous financial year, with the performance supported by higher receipts from both oil and non-oil imports.
Domestic taxes, however, fell short of target despite growing by 9.7 per cent to Sh1.851 trillion, achieving 93 per cent of the annual goal.
Among individual tax categories, PAYE remained the largest source of domestic revenue, generating Sh598.8 billion, a 6.7 per cent increase.
KRA, however, noted that growth remained below historical averages due to the shrinking share of formal employment, which declined from 15.7 per cent in 2022 to 15.3 per cent in 2025, limiting expansion in payroll taxes.
Corporation Tax recorded one of the strongest performances, rising 14 per cent to Sh347.1 billion, driven by improved profitability among firms in ICT, manufacturing, transport, energy and wholesale trade.
Banks alone accounted for 26.1 per cent of total Corporation Tax collections after remittances from the sector grew 11.1 per cent.
The authority also reported robust growth in betting-related taxes.
Excise duty on betting services reached Sh16.5 billion, exceeding the annual target by Sh2.27 billion and recording 24.9 per cent growth. Betting Tax and withholding tax on gaming winnings also posted double-digit increases.
Digital taxation continued to gain traction following the expansion of the Significant Economic Presence Tax (SEPT). Collections doubled to Sh1.61 billion, reflecting wider coverage of non-resident digital businesses following changes introduced under the Finance Act 2025.
KRA attributed much of its improved performance to continued investment in technology aimed at sealing tax leakages and improving compliance.
By June 2026, more than 750,900 taxpayers had been onboarded onto the Electronic Tax Invoice Management System (eTIMS), strengthening VAT compliance and transaction visibility.
“Integration of iTax, the Integrated Customs Management System, AI-powered analytics, cargo scanners and pre-populated tax returns have enhanced transparency, improved taxpayer compliance and reduced opportunities for revenue leakage, laying the foundation for stronger domestic revenue mobilisation in the years ahead,” Mohamed said.
