Kenyan banks paid KSh205.58bn in taxes in 2025, the first time the sector’s total tax contribution passed the KSh200bn mark, according to the Kenya Bankers Association Total Tax Contribution Report 2025 prepared with PwC Kenya.
The total represents a 5.53 per cent rise from KSh194.81bn in 2024 and equals about 8 per cent of government receipts. The report covered 33 institutions – 31 commercial banks and two micro-finance institutions – which together hold 96.9 per cent of the sector’s net assets.
Taxes collected on behalf of the government reached KSh107.22bn, exceeding taxes borne of KSh98.36bn for the first time in the study. Withholding tax collected rose 29.40 per cent to KSh43.95bn, overtaking employment-related taxes as the second-largest component behind corporate tax.
The increase in withholding tax was driven by a 159 per cent rise in royalties after the Tax Laws (Amendment) Act 2024, a 292 per cent surge in professional-fee withholding linked to banks’ core-banking system upgrades, and an approximately nine per cent rise in interest withholding as customer deposits grew 9.9 per cent to KSh6.12tn.
Corporate tax borne grew 2.06 per cent to KSh70.84bn, while profit before tax rose 17.63 per cent to KSh305.95bn. The sector’s total tax rate fell from 38.50 per cent to 32.15 per cent, meaning KSh32.15 of tax was paid for every KSh100 of profit.
Banks spent an estimated KSh30.99m on tax compliance in 2025, up 62.25 per cent from the previous year. On average each bank made 45 tax payments per month, devoted about 103 business hours per month to compliance and employed roughly 2.98 full-time staff on tax matters.
Kenya Bankers Association chief executive Raimond Molenje said the total tax contribution was delivered within an increasingly demanding tax compliance environment. PwC Kenya partner for tax and legal services Alice Muriithi said the findings point to the need for continued collaboration between policymakers, revenue authorities and taxpayers to simplify reporting obligations and improve digital tax platforms.
The report noted that banks rated the complexity of filing at 3.19 out of 5 and identified the five-day withholding-tax filing cycle as a major burden. KBA called for a return to monthly withholding-tax filing, greater automation and better integration of iTax and eTIMS.
The sector distributed KSh402.26bn in 2025, with the government receiving KSh205.58bn (51.11 per cent), employees KSh111.62bn (27.75 per cent) and shareholders KSh85.06bn (21.15 per cent). The Kenya Revenue Authority reported total revenue of KSh2.8tn in the 2025/26 financial year.
