This archive report was first published on 3 September 2021.
Published on September 3, 2021, a report by Pricewaterhouse Coopers (PwC) revealed that the banking sector in Kenya contributed 27% of all corporate taxes paid in the country in 2019 and 2020.
However, the sector's contribution dropped to 24.1% in 2020, compared to 29.7% in 2019. This decline was attributed to reduced profits due to loan payment holidays granted by banks to customers in the wake of the COVID-19 pandemic.
Kenya Bankers Association Chief Executive Officer (CEO) Habil Olaka noted that the banking sector's high compliance levels were indicative of the increased tax contribution. Despite a 21.2% reduction in corporation taxes paid by the sector in 2020 relative to 2019, the sector's overall tax contribution remained significant.
"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," Olaka said.
The report noted that the banking sector's total tax contribution declined by 12% in 2020, dropping to Sh224.9 billion. This decline was partly attributed to reduced tax rates, including the reduction of the corporate tax rate from 30% to 25%, the reduction of the top PAYE rate from 30% to 25%, and the reduction of the Value Added Tax rate from 16% to 14%.
