Kenya’s banks paid a record Sh205.58 billion in taxes in 2025, the first time the sector’s annual contribution to the Exchequer crossed the Sh200 billion mark, according to a new industry report.
The 2025 Total Tax Contribution Report by the Kenya Bankers Association (KBA), released on Thursday, October 22, 2026, shows that the tax paid and collected by the sector rose by 5.53 per cent to Sh205.58 billion, up from Sh194.81 billion in 2024.
The figure has more than doubled since 2018, when it stood at Sh99 billion. The banks covered by the report accounted for about 8 per cent of all Government tax receipts during the year.
Of the total, Sh98.36 billion was paid directly in taxes by the banks, while Sh107.22 billion was collected on behalf of the Government. The latter included Pay As You Earn (PAYE) deducted from employees’ salaries, withholding tax and excise duty. Withholding tax collected rose by 29.4 per cent to Sh43.95 billion, personal income tax rose by 6.4 per cent to Sh36.81 billion, and excise duty stood at Sh23.90 billion.
The banks paid Sh70.84 billion in corporate income tax, 2.06 per cent more than in 2024, accounting for 22.15 per cent of all corporate tax collected in the country. Together, the taxes added 1.80 percentage points to the country’s projected tax-to-GDP ratio of 14.8 per cent.
The sector’s growing contribution came amid strong earnings. Profit before tax rose by 17.63 per cent to Sh305.95 billion. Even so, the sector’s total direct tax burden fell by 1.77 per cent, while its total tax rate declined from 38.50 per cent in 2024 to 32.15 per cent in 2025.
The report also shows how the sector distributed the value it generated during the year. Of the Sh402.26 billion distributed by the banks, the Government received the largest share: Sh205.58 billion, or 51.11 per cent.
Employees took home Sh111.62 billion, or 27.75 per cent, in net salaries and benefits, while shareholders received Sh85.06 billion, or 21.15 per cent, in dividends. “The Government received the largest proportion of the value distribution,” the report states.
However, lenders say the cost of meeting their tax obligations is rising sharply. The average annual cost of tax compliance per institution jumped by 62.25 per cent, from Sh19.10 million to Sh30.99 million. KBA Chief Executive Officer Raimond Molenje said banks now need dedicated staff just to keep up.
“Approximately each and every bank has two full-time employees across the board; from tier 3 banks to now in tier one banks, that number may rise even to 6 full-time staff who are just dedicated to matters tax,” he said.
Tax experts said the growth in collections through banks reflects the structure of the economy, where much of the tax burden falls on the formal sector.
“The taxes that grow much faster are the agency or the consumption taxes,” said Alice Muriithi, a partner for Tax and Legal Services at PwC Kenya.
“If you think about it, for me to pay my PAYE, KRA does not rely on me to do a self-declaration; they rely on my employer to do that, and that’s an example of an agency tax that will continue to grow to the extent that our economy continues to be largely informal.”
The report was released as the KBA called on the Government to cut PAYE by five percentage points for all workers, going beyond President William Ruto’s plan to exempt those earning Sh32,333 or less a month.
“We are not purely seeking to have money back in the pocket; what we are looking for is trust,” Molenje said.
Treasury Cabinet Secretary John Mbadi said the Government was weighing the needs of households against the cost of public services.
“The government recognises the pressure on households’ disposable income and the importance of fair personal income taxes,” he said. “Consideration of PAYE reforms must balance improving household welfare with the need to finance essential public services.”
The report covers 33 institutions—31 commercial banks and two microfinance banks—which together hold 96.9 per cent of the sector’s net assets.
