Nairobi — A total of 39 banks in Kenya paid Sh181.27 billion in taxes to the Government in 2022, despite tough economic challenges.

The latest study from PricewaterhouseCoopers (PwC) and the Kenya Bankers Association (KBA) shows Total Tax Contribution (TTC) from the lender grew 39.94 percent from Sh129.52 billion in 2021.

Overall, the report says that last year's tax contribution from the banking sector was 8.93 percent of Kenya's total tax collections, up from 6.8 percent in the previous year.

"This report provides valuable insight into how the Total Tax Contribution of the banks grew by 39.94% in 2022 relative to 2021," PwC Kenya Country Senior Partner and Regional Senior Partner, Eastern Africa, Peter Ngahu, said.

"This was despite a challenging environment characterised by increased inflation, prolonged drought, depreciation of the Kenyan shilling against major currencies," Ngahu added.

"Other pressures included geopolitical tensions arising from the Russia-Ukraine conflict, and election-related uncertainties."

It also reveals that the Total Tax Rate, which is a measure of the ratio of all taxes borne relative to profitability, was 43.09 percent, meaning that for every Sh100 of profits, banks paid Sh43.09 to the government as taxes.

The study surveyed nearly 98 percent of Kenyan banking players.

"Between 2021 and 2022, Excise Duty experienced a remarkable growth rate of 60.13%. This can be attributed to an increase in non-funded income (including fees and commissions) and an increase in the volume and value of digital transactions given the continued investments in technology," says PwC Tax Partner Alice Muriithi.

"The growth in Excise Duty is also attributed to the introduction of Excise Duty on fees and commissions on loans by the Finance Act, 2021 with effect from 1 July 2021 meaning that fees and commissions on loans were subject to Excise Duty for the entire 2022 financial year - compared to only half of the 2021 financial year," she added.