This archive report was first published on 2 September 2021.
On September 2, 2021, a report by PricewaterhouseCoopers revealed that the COVID-19 pandemic had a significant impact on Kenya's banking sector, causing a 12 percent decline in tax contribution.
The report, which surveyed 32 banks, found that the decline was largely due to reduced tax rates across various sectors of the economy.
According to the report, the reduction of corporate tax rate from 30 percent to 25 percent, PAYE rate from 30 percent to 25 percent, and Value Added Tax rate from 16 percent to 14 percent contributed to the decline.
Corporate tax and PAYE were the largest contributors to the total tax filed by the sector, accounting for 42.5 percent and 16.5 percent respectively.
The report also revealed that the cumulative ratio of taxes borne to profit during the period was 48.5 percent, representing the Total Tax Rate (TTR) of the participating banks.
Kenya Bankers Association Chief Executive Officer Habil Olaka noted that the industry has remained resilient and continued supporting the economy despite the challenges occasioned by the pandemic.
As part of its efforts to support the economy, the banking sector invested nearly Sh1.6 billion in technology in 2019 and 2020, compared to Sh1.3 billion invested between 2017 and 2018.
