The Kenya Bankers Association (KBA) released its 2025 Total Tax Contribution Report on 22 October 2026, showing that banks paid Sh205.58 billion in taxes, the first time the sector’s annual contribution exceeded Sh200 billion.

The total tax figure represents a 5.53 percent rise from the Sh194.81 billion recorded in 2024 and more than doubles the Sh99 billion paid in 2018.

Banks contributed roughly 8 percent of all government tax receipts for the year, with Sh98.36 billion paid directly and an additional Sh107.22 billion collected on behalf of the Treasury.

Collected taxes included PAYE from employee salaries, withholding tax and excise duty, with withholding tax rising 29.4 percent to Sh43.95 billion and personal income tax up 6.4 percent to Sh36.81 billion.

Corporate income tax paid by banks reached Sh70.84 billion, a 2.06 percent increase over 2024, representing 22.15 percent of all corporate tax collected nationally.

The sector’s tax contribution added 1.80 percentage points to Kenya’s projected tax‑to‑GDP ratio of 14.8 percent.

Despite higher tax collections, banks’ overall direct tax burden fell 1.77 percent, with the effective tax rate dropping from 38.50 percent in 2024 to 32.15 percent in 2025.

The KBA noted that compliance costs have surged, with the average annual cost per institution rising 62.25 percent to Sh30.99 million, prompting banks to allocate dedicated staff for tax matters.

KBA chief executive Raimond Molenje said banks now employ two to six full‑time staff solely for tax compliance, reflecting the growing administrative burden.

PwC Kenya partner Alice Muriithi explained that the rapid growth in agency and consumption taxes, such as PAYE collected by employers, drives much of the increase as Kenya’s formal sector expands.

The KBA used the report to call for a five‑percentage‑point reduction in PAYE for all workers, arguing that lower rates would build trust while the Treasury weighs household welfare against public‑service financing.