Banks remit Sh194.81 billion in taxes as KBA calls for review of PAYE to boost purchasing power
While the sector’s share of total tax receipts slightly declined from 8.78 per cent in 2023, it remains a substantial contribution given that it originates from only 36 entities out of more than eight million registered taxpayers.
Kenya’s banking sector contributed Sh194.81 billion in taxes to the National Treasury in 2024, accounting for 8.09 per cent of all government revenue, according to the Total Tax Contribution of the Kenya Banking Sector – 2024 report released by the Kenya Bankers Association (KBA).
The report, now in its sixth edition, shows that 36 participating banks and microfinance institutions collectively paid Sh100.12 billion in taxes borne and collected a further Sh94.69 billion on behalf of the government.
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While the sector’s share of total tax receipts slightly declined from 8.78 per cent in 2023, it remains a substantial contribution given that it originates from only 36 entities out of more than eight million registered taxpayers.
"For every Sh100 in profit, banks paid Sh38.50 to the National Treasury, highlighting the sector’s role in revenue mobilisation," said Raimond Molenje, KBA Chief Executive Officer.
The study highlights that people-related taxes continued to dominate collections, with Pay As You Earn (PAYE) accounting for 91.85 per cent of all employee-related taxes. PAYE rose to Sh31.77 billion in 2024, up from Sh29.09 billion the previous year. The increase was attributed to the sector’s employment of skilled professionals and the July 2023 adjustment of the top PAYE rate to 35 per cent.
Other notable increases were recorded in statutory deductions. Contributions to the Social Health Insurance Fund (SHIF) grew by 41.45 per cent, while National Social Security Fund (NSSF) collections surged by 76.88 per cent following the implementation of new contribution structures.
Withholding Tax collections rose by 16 per cent to Sh33.97 billion, reflecting higher deposit volumes and elevated interest rates. Excise Duty, however, declined by 4.83 per cent to Sh22.66 billion due to reduced credit uptake.
Despite higher pre-tax profits of Sh260.09 billion, Corporate Tax declined by 4.98 per cent to Sh69.41 billion, representing 23.73 per cent of total Corporate Tax receipts. The decline was linked to a shift towards tax-exempt government securities and a 68 per cent rise in bad debts written off.
Molenje said the banking industry’s tax contribution underscores its vital role in revenue mobilisation but stressed the need to revise PAYE tax brackets to strengthen purchasing power and stimulate production.
“As we reflect on tax matters, we must also reflect on how to revive purchasing power to move production in the economy,” said the KBA boss.
“There is a solution within our reach. We need to make a bold move and revise the PAYE brackets downwards across all ecosystems within our employed workforce.”
He added that it is in the best interest of the banking industry and the country to be self-sustaining.
“Those privileged to be in employment are the best local investors who can transform the country,” Molenje said.
“We need to reflect: if we have to grow our revenue base, if we have to create jobs, and if we have to improve livelihoods within our ecosystems pursuant to Vision 2030.”
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