The Kenya Banking Sector contributed a total of Ksh194.81 billion ($1.51 billion) to the National Treasury in the year ended December 31, 2024, according to the Total Tax Contribution of the Kenya Banking Sector 2024 Report.

The report, released by the banking industry’s umbrella body, Kenya Bankers Association (KBA) in collaboration with PwC (PricewaterhouseCoopers) Kenya, reveals that the Total Tax Contribution (TTC) from 36 participating banks and microfinance institutions represented 8.09 per cent of all government tax receipts for the period, highlighting a significant reliance on a small pool of highly compliant taxpayers within the economy.

Currant exchange: Ksh100 Kenyan is equivalent $0.7718.

According to the report, the Ksh194.81 billion TTC comprised Ksh100.12 billion in taxes borne, direct costs to the banks such as Corporate Tax and Ksh94.69 billion in taxes collected on behalf of the government, such as Pay As You Earn (PAYE) and Withholding Tax.

Additionally, a notable trend from the report is the shifting nature of the tax burden. While corporate tax remained the single largest component at Ksh69.41 billion (35.63 per cent of TTC), it declined by 4.98 per cent compared to 2023. This was partly offset by a significant rise in people-related taxes, driven by the full-year implementation of the Affordable Housing Levy (AHL), which saw collections from the banking sector more than double, surging by 113 per cent to Ksh3.45 billion.

Notably, the report finds that for every Ksh100 of profit made by the participating banks, Ksh38.50 was paid to the government as taxes, a measure known as the Total Tax Rate (TTR). The trend represents a decrease from 46.77 per cent in 2023, primarily driven by an increase in bank profitability.

In his statement, KBA Chief Executive Officer (CEO) Raimond Molenje noted that the Ksh194.81 billion tax contribution by 36 participating banks in 2024 highlights the sector’s central role in Kenya’s revenue mobilization.

“This data provides valuable insights for policymakers as they consider how to balance fiscal sustainability with sector resilience,” Molenje pointed out.

He added that the banks’ voluntary participation also reflects a strong commitment to transparency and responsible governance.

Echoing his remarks, Peter Ngahu, PwC Country and Regional Senior Partner for Eastern Africa reiterated that the 8.09 per cent contribution from just 36 taxpayers underscores the banking sector’s important role in Kenya’s tax revenues and highlights the continued reliance on a few highly compliant taxpayers.

“This data informs the essential dialogue around tax policy needed to ensure the sector remains robust,” Ngahu observed.

Meanwhile, the report further examined how banks distribute value to their key stakeholders where in 2024, the government received the largest portion at 54.95 per cent via taxes, followed by employees at 25.62 per cent through salaries and benefits and shareholders at 19.44 per cent through dividends.

Equally, the report revealed that banks incur significant administrative costs, with an average of three full-time employees dedicated to tax-related tasks, costing about Ksh13.5 million per bank each year. Participants suggested reducing this burden by returning to monthly Withholding Tax filings and increasing automation using platforms such as iTax and eTIMS.

• A Tell Media / KNA report / By Michael Omondi