Kenya Bankers Association’s Post

The banking industry has doubled its tax contribution over the past five years, reaching KES 190 billion in 2023 alone. From 2018 to 2023, the sector contributed KES 825.16 billion in total taxes, representing 8.78% of all government taxes collected in 2023. For every KES 100 generated by the sector, KES 57.2 goes to the government in taxes, KES 27.8 to employees, and KES 15 to shareholders. In 2023, the banking sector paid KES 73.05 billion in corporate taxes (28.59% of all corporate taxes in Kenya), KES 28.93 billion in PAYE, and KES 23.81 billion in excise duty (59.45% of excise duty from financial services). The industry's growth and tax contributions are driven by its support for MSMEs in formalizing operations, opening bank accounts, accessing credit, and contributing to the economy. #InuaBiashara

Kenya's VAT collections have exceeded the Treasury's target by Sh6 billion for the first time in seven years. The KRA received Sh313.37 billion in domestic value-added tax (VAT) for the year ending June 2024, making it the only tax category to surpass its goal during the review period, thanks to the requirement for all businesses to issue electronic receipts. #kenya #vat #tradearlnews

''In 2023 alone, the banking sector contributed KES 190 billion to government in revenue, double what we contributed in 2018. From 2018 to 2023, the banking sector contributed a total tax of KES 825.16 billion. The sector’s total tax contribution reached a record KES 190.26 billion IN 2023, representing 8.78% of all government taxes collected. What these numbers tell me is that for every KES 100 generated by the sector, KES 57.2 goes to the government in taxes, KES 27.8 to employees, and KES 15 to shareholders. Also in 2023, the industry contributed KES 73.05 billion in corporate taxes, making up 28.59% of all corporate taxes paid in Kenya. Additionally, the industry paid KES 28.93 billion in PAYE and KES 23.81 billion in excise duty, representing 59.45% of excise duty collected from the financial services sector'' - John Gachora, Kenya Bankers Association Chairman #InuaBiashara

Okiyah Omtatah has today aluded to a a debate around Kenya's tax structure and its computation based on total income. That, is it prudent for us as a country to continue taxing deductions like PAYE, NHIF (SHA), NSSF, and insurance premiums based on the total income as opposed to the reducing balance? This is a worthy discussion for us especially based on pronunciations by Mbaddi on the need to have a country that helps facilitate more money into the pocket of people. What we need to do as a country is to develop a tax model of the western nations U.S. and Canada. There is a need to deduct like NSSF, SHIF, and any other aspect of the taxes that can be offered universally then our PAYE or any other deductions to be based on the net. While this approach reduces the taxable base, it alleviates the tax burden from the people. This is not only going to make the people demand more from the government based on the deductions but also lessen the tax burden on people.

The President has signed into law seven bills, including the Tax Laws (Amendment), Tax Procedures (Amendment), Business Laws (Amendment) and Kenya Revenue Authority (Amendment) Bills. Key changes include the introduction of a 6% Significant Economic Presence (SEP) tax on multinational firms, an increase in the mortgage interest deduction limit to KES 360,000 and excise duty exemptions for locally assembled electric vehicles. The Business Laws (Amendment) Bill raised banks’ core capital requirements to KES 10 billion and empowered the CBK to regulate non-deposit-taking lenders. Additionally, the Kenya Revenue Authority Act now allows the Commissioner-General to appoint Deputy Commissioners with board approval. These laws aim to... #tax #kenya

𝐒𝐢𝐧𝐠𝐥𝐞 𝐩𝐚𝐲𝐛𝐢𝐥𝐥 𝐫𝐚𝐢𝐬𝐞𝐬 𝐒𝐭𝐚𝐭𝐞 𝐫𝐞𝐯𝐞𝐧𝐮𝐞 𝐛𝐲 𝐒𝐡𝟏𝟖.𝟓 𝐛𝐢𝐥𝐥𝐢𝐨𝐧 Kenya's implementation of a single paybill system (222222) for government services has significantly boosted revenue collection, with appropriations in aid (AiA) increasing by Sh18.5 billion to reach Sh111.3 billion in the quarter ending September 2024, exceeding targets by 28.8%. The improvement is attributed to the digitization and centralization of over 15,000 government services through e-citizen since 2023, allowing Treasury to better track cash flows and prevent agencies from collecting payments through separate accounts. While AiA collections flourished, the Kenya Revenue Authority (KRA) faced challenges in tax collection, falling short of its Sh605.5 billion target by Sh14.6 billion during the first quarter of 2024/25 fiscal year, with underperformance across all tax categories including VAT, Excise Duty, Import Duty, and Pay-As-You-Earn. Nevertheless, overall tax collections showed a 10% improvement compared to the same period in the previous fiscal year, increasing by Sh54 billion despite missing targets. This disparity suggests that while technological advancements can bolster certain revenue streams, they cannot singularly address broader economic challenges affecting tax compliance and collection. Therefore, a multifaceted approach, combining technological innovation with robust economic policies, is imperative to achieve comprehensive fiscal health. #KenyaEconomy #DigitalTransformation 𝑁𝑜𝑡𝑒: 𝐼𝑚𝑎𝑔𝑒 𝑖𝑠 𝐴𝐼 𝐺𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑

On October 29, 2024, the Supreme Court of Kenya issued a final ruling that overturned the Court of Appeal’s decision declaring the Finance Act 2023 unconstitutional. Following the Supreme Court decision, we highlight some of the key provisions of Finance Act 2023 that will continue to remain in force below. 1️⃣ eTIMS: Requirement for businesses to issue eTIMS invoices. 2️⃣ Allowable Expenses: Only expenses backed by eTIMS-compliant invoices are deductible for Corporate Income Tax, unless exempted by law. 3️⃣ Corporate Tax on Branches: Corporate tax rate for branches at 30%. 4️⃣ PAYE Bands: Income tax rates at 32.5% for income over KES 500,000 per month and 35% for income over KES 800,000 per month. 5️⃣ VAT on Exported Services: Exported services are zero-rated. 6️⃣ VAT on Fuel: VAT on petroleum products (excluding LPG) at 16%. 7️⃣ Monthly Rental Income: Tax rate on monthly rental income at 7.5%. 8️⃣ Digital Asset Tax: 3% tax on income from transferring or exchanging digital assets.

Commercial banks grouped in the Tanzania Bankers Association (TBA) contributed 3.9trn/- to the economy in taxes in the past three years, an 18% share of total corporate tax revenues countrywide. Theobald Sabi, the NBC Bank managing director and TBA chairman, unveiled the report covering January 2021 to December 2023. Corporate tax revenues increased dramatically in the period, reaching 537bn/- in 2022 and rising to 718bn/- in 2023, the report indicates, pointing out that VAT and excise duty charged on financial services were also on the rise. It showed a significant increase to 313bn/- in 2022 and 375bn/- in 2023 while banks' Pay As You Earn (PAYE) contribution from 2021-2023 amounted to 673bn/-, being 8.4% of total PAYE collections, while TBA members' employment taxes, comprising the Skills and Development Levy (SDL) and the Workers Compensation Fund, amounted to 121.1bn/-, aside from employer social security contributions, the report affirms. Other taxes cited are service levy, stamp duty, property tax and customs duty, where the 26 TBA member banks paid service levy totalling 23.3b/-, stamp duty reaching 2.48bn/-, property tax at 0.77b/-, and customs duty 0.4bn/-, the report indicates.

that's the way forward

*Is Pakistan taxing itself to death?* Fifteen years ago, Pakistanis paid Rs1.7 trillion in taxes. Imagine, last year, Pakistanis paid Rs9.4 trillion in taxes. During the same period, government expenditure skyrocketed from Rs2.7 trillion to Rs25 trillion. The government has suffered massive losses: Rs2.8 trillion in buying and selling electricity, Rs1.3 trillion in managing commodities, Rs825 billion from PIA liabilities, and Rs224 billion from Pakistan Steel. This year alone, grants amounted to Rs1.7 trillion, while subsidies reached Rs1.4 trillion. The real issue is not about taxes – it is about runaway government losses. High taxes are merely a symptom; excessive government expenditure is the underlying disease. The real challenge lies not in how much Pakistanis pay in taxes but in curbing the government’s wasteful spending. Taxes provide fuel, but government spending determines the direction. https://lnkd.in/dwf7gebS