Banks in Kenya paid a total of Sh129.52 billion to KRA in tax in 2021 an increase of 24 per cent from Sh104.8 bn in 2020.
According to the latest edition of corporate finance firm PricewaterhouseCoopers's Total Tax contribution report, the 2021 contribution was 6.82 per cent of the total tax receipts in Kenya compared to 6.9 per cent in 2020.
The increase is attributed to the significant market recovery especially in service industries including hospitality, aviation and SME sector.
At least 38 banks participated in the study ,representing 97 per cent of the market share.
The study uncovered that banks paid Sh50.69 billion in corporate taxes in 2021 which represents 26 per cent of the corporate taxes collected in Kenya.
This is a 24 per cent increase compared to the Sh41.28 billion collected in 2020.
Kenya Bankers Association CEO Habil Olaka attributed the increase to an increase in the profit before tax of the banks of 85.17 per cent in 2021 relative to 2020.
"The PBT increase is aligned to increased economic activity in 2021 as reflected by the GDP growth which grew from -0.3% in 2020 to 7.5% in 2021," Olaka said.
He added that the increase in corporation tax can also be partly explained by the increase in the corporation tax rate from 25 per cent in 2020 to 30 per cent in 2021.
The study also revealed that the measure of the cost of all taxes borne relative to profitability was 32.85 per cent.
This means that for every Sh100 of profits, banks paid Sh32.85 to the government as taxes.
