Kenyan Banks’ Tax Contribution grows 39 per cent
- Tax payouts by 39 banks was Sh 181.27b.
- Total Tax Contribution of the banks grew by 39.94% in 2022 relative to 2021.
- Overall, last year’s tax contribution from the banking sector was 8.93 percent of Kenya’s total tax collections, up from 6.8 percent in the previous year.
Tax Contribution (TTC) from Kenyan banks grew 39.94 percent from Sh129.52 billion in 2021, a report by PricewaterhouseCoopers (PwC) and the (KBA) has shown.
The study also shows that a total of 39 banks in Kenya paid Sh181.27 billion in taxes to the Government in 2022. Nearly 98 percent of Kenyan banks were surveyed.
PwC Kenya Country Senior Partner and Regional Senior Partner, Eastern Africa, Peter Ngahu, said the report provides valuable insight into how the Total Tax Contribution of the banks grew by 39.94% in 2022 relative to 2021.
“This was despite a challenging environment characterised by increased inflation, prolonged drought, depreciation of the Kenyan shilling against major currencies,” said Ngahu.
Overall, the report says that last year’s tax contribution from the banking sector was 8.93 percent of Kenya’s total tax collections, up from 6.8 percent in the previous year.
“Other pressures included geopolitical tensions arising from the Russia-Ukraine conflict, and election-related uncertainties.”
It also reveals that the Total Tax Rate, which is a measure of the ratio of all taxes borne relative to profitability, was 43.09 percent, meaning that for every Sh100 of profits, banks paid Sh43.09 to the government as taxes.
“Between 2021 and 2022, Excise Duty experienced a remarkable growth rate of 60.13%. This is attributable to an increase in non-funded income (including fees and commissions) and in the volume and value of digital transactions given the continued investments in technology,” says PwC Tax Partner Alice Muriithi.
“Growth in Excise Duty is also attributed to the introduction of Excise Duty on fees and commissions on loans by the Finance Act, 2021 with effect from 1 July 2021.”
“Fees and commissions on loans were thus subject to Excise Duty for the entire 2022 financial year – compared to only half of the 2021 financial year,” she added.
