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Kenya’s banking sector contributed a record KSh205.58 billion in taxes in 2025, up 5.53% from KSh194.81 billion, and for the first time banks collected more tax on the government’s behalf than they paid themselves, according to the Kenya Bankers Association’s Total Tax Contribution Report 2025, prepared with PwC and reported by The Star.
Banks’ tax contribution in Kenya, 2025
| Tax | 2024 | 2025 | Change |
|---|---|---|---|
| Total tax contribution | KSh194.81bn | KSh205.58bn | +5.53% |
| Taxes collected for government | KSh94.69bn | KSh107.22bn | +13.24% |
| Taxes borne by banks | KSh100.12bn | KSh98.36bn | -1.77% |
| Corporate tax | KSh69.41bn | KSh70.84bn | +2.06% |
| Withholding tax collected | KSh33.97bn | KSh43.95bn | +29.4% |
| Employment taxes collected | KSh34.59bn | KSh36.81bn | +6.4% |
| Excise duty | KSh22.66bn | KSh23.90bn | +5.46% |
| Irrecoverable VAT | KSh15.27bn | KSh13.65bn | -10.64% |
Withholding tax drives the rise
The Tax Laws (Amendment) Act, 2024 widened the definition of royalties, pulling more payments, such as software licences, into withholding tax. Withholding tax on royalties rose 159% and on professional fees 292%, the latter reflecting heavy bank spending on core banking system upgrades. Withholding tax on interest grew about 9% as customer deposits rose 9.9% to KSh6.12 trillion. For how these rates work for individuals, see our guide to withholding tax for consultants.
Corporate tax lagged profit growth
Banks’ profit before tax grew 17.63%, but corporate tax rose only 2.06%. The report attributes the gap partly to more investment in tax-exempt government securities.
Compliance costs jump 62%
The average annual cost of tax compliance per bank rose 62.25% to KSh30.99 million, including about KSh20.22 million on outside tax advisers. Banks made about 45 tax payments a month and spent roughly 103 business hours a month on compliance. They rated filing complexity at 3.19 out of 5.
The KBA wants a return to monthly withholding tax filing instead of the current five-day deadline, more automation, and better integration of iTax and eTIMS. “These findings point to the need for continued collaboration between policymakers, revenue authorities and taxpayers to simplify reporting obligations,” said PwC Kenya tax partner Alice Muriithi.
Why it matters
The 33 institutions covered hold 96.9% of sector net assets and account for about 8% of all government receipts. Higher compliance costs are ultimately passed to customers through fees and rates. Banks are also building shared infrastructure to cut borrowing costs; see the electronic collateral registry plan.
FAQ
How much tax did Kenyan banks contribute in 2025?
KSh205.58 billion, a record, according to the KBA/PwC report.
Why did withholding tax rise?
A wider definition of royalties from the Tax Laws (Amendment) Act, 2024, plus more spending on professional and IT services and higher deposits.
Updated October 31, 2026.
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