This archive report was first published on 3 September 2021.
Kenya's banking sector played a significant role in the country's corporate tax revenue in 2019 and 2020, contributing 27 percent of all corporate taxes paid, a survey by Pricewaterhouse Coopers (PwC) has revealed.
Published on September 3, 2021, the report noted that while the sector's contribution remained steady in 2019 at 29.7 percent, it dropped to 24.1 percent in 2020 due to reduced profits resulting from loan payment holidays granted to customers during the COVID-19 pandemic.
Kenya Bankers Association Chief Executive Officer (CEO) Habil Olaka attributed the sector's high compliance levels to the increased tax contribution, despite a 21.2 percent reduction in corporation taxes paid by the sector in 2020 relative to 2019.
Olaka emphasized the importance of the financial services sector in supporting economic growth, stating, 'As an industry, we recognize the important role the financial services sector plays in supporting economic growth. In this regard, we remain committed to sustaining efforts towards anchoring business recovery in the face of OVID-19 disruption.'
The survey, conducted among 32 banks between December 2019 and 2020, noted a 12 percent decline in the banks' total contribution of all taxes, which dropped to Sh224.9 billion. The decline was partly attributed to reduced tax rates, including the reduction of the corporate tax rate from 30 percent to 25 percent, the top PAYE rate from 30 percent to 25 percent, and the Value Added Tax rate from 16 percent to 14 percent.
