Kenya’s banking sector contributed KSh205.58 billion in taxes to the government in 2025, highlighting the industry’s growing role in supporting public revenue and financing government operations.

National Treasury Cabinet Secretary John Mbadi announced the figures on Thursday, October 22, 2026, during the launch of the 2025 Total Tax Contribution Report in Nairobi.

The report, prepared by PricewaterhouseCoopers (PwC) on behalf of the Kenya Bankers Association (KBA), covers taxes paid directly by banks as well as taxes collected from other taxpayers and remitted to the government.

According to the report, the total contribution increased by 5.53 per cent from KSh194.81 billion recorded in 2024.

The banking industry’s contribution accounted for approximately eight per cent of Kenya’s total government revenue, underlining its importance to the country’s tax collection system.

How Banks Contributed KSh205.58 Billion

The report shows that banks paid KSh98.36 billion directly in taxes, while another KSh107.22 billion was collected and remitted on behalf of other taxpayers.

The second category includes taxes collected through banking activities, including deductions and payments made on behalf of employees and customers.

The amount collected and remitted by banks increased by 13.24 per cent compared with 2024, while taxes paid directly by the institutions declined slightly.

The figures also show that the banking sector contributed an amount equivalent to approximately 1.8 per cent of Kenya’s gross domestic product (GDP).

The report covered 33 banks and two microfinance institutions, which together represented an estimated 96.9 per cent of the banking sector’s net assets.

Mbadi Calls for Fair and Predictable Tax Policies

During the report’s launch, Mbadi called for a tax system that supports compliance while creating a favourable environment for businesses and investors.

The Treasury Cabinet Secretary said the government was committed to evidence-based tax reforms, better evaluation of tax incentives and more efficient tax administration.

He also urged banks to identify specific challenges they face when complying with tax regulations so that the government can address administrative difficulties and improve efficiency.

The Treasury wants to strengthen revenue collection without creating unnecessary barriers to investment, business expansion and job creation.

The government has also emphasised the importance of using technology and reliable information to improve tax compliance while protecting taxpayer confidentiality and personal data.

Cost of Tax Compliance Rises for Banks

Despite their significant contribution to government revenue, banks are facing higher costs associated with meeting tax obligations.

The report found that the average in-house cost of tax compliance rose by 62 per cent to KSh30.99 million in 2025, up from KSh19.10 million in 2024.

External tax consultants accounted for a substantial share of these expenses.

The participating banks also spent an average of 103 business hours on tax compliance and made approximately 45 tax payments every month.

The findings highlight the administrative burden businesses face as they navigate tax filing, reconciliation and reporting requirements.

Banking Sector’s Role in Kenya’s Economy

The banking industry remains an important contributor to Kenya’s formal economy through tax payments, employment, lending and financial services.

However, tax experts have called for a broader tax base to reduce the government’s dependence on a relatively small number of large businesses and formal sectors.

Expanding formal economic activity could allow more businesses to contribute to public revenue while creating additional employment opportunities.

The latest report therefore presents two important issues for policymakers: maintaining the banking sector’s contribution to government revenue and ensuring that tax compliance remains efficient and predictable.

The Treasury says continued engagement between the government, the Kenya Revenue Authority and private-sector institutions will be important in addressing these challenges.