Markets & Finance

PwC ranks Kenya among highest taxed countries

tax

Report says firms in Kenya on average pay a tax rate of 44.2 per cent, slightly higher than the 43.1 per cent global average. FILE

Kenya is among the most difficult countries for a company to pay taxes, according to a global survey by consultancy firm PricewaterhouseCoopers.

PwC’s Paying Taxes Report 2014 says that the average tax rate, the number of taxes and the time it takes a company in Kenya to comply — the three key measures used in the report — are all higher than the global average.

The report found that a company in Kenya on average pays a total tax rate of 44.2 per cent, slightly higher than the 43.1 per cent global average.

Firms operating locally on average have to pay 41 types of taxes against the 26.7 global average and while it takes a firm operating locally 308 hours to comply with taxes, the global average is 268 hours.

Overall, the report ranked Kenya 166 out of 189 countries in the ease of paying taxes. Kenya was position 164 in the 2013 report. Despite the low ranking, the country has made some gains on the time it takes to comply with taxes since the introduction of online VAT filing in 2009.

“Companies have reported improvements in the processing speed on the filing website, a major source of delay in the previous years. This reduced the time required to comply with VAT from 340 to 308 hours,” says the report.

Kenya also scored higher than Africa’s average. Africa’s average total tax rate and the times it takes to comply with taxes was higher at 52.9 per cent and 320 hours respectively.

The average number of taxes for Africa was, however, lower at 36.1. Regionally and among key markets, Kenya still lagged behind most countries. Rwanda was ranked 22, Uganda 98, Tanzania 141 and Burundi 143. South Africa was ranked 24 while Nigeria was number 170.

Tax scholars said that the findings add to research by bodies such as the World Bank and the International Finance Corporation which have found tax compliance in Kenya being one of the most difficult in the word.

“Kenya is always being cited among countries that are problematic,” Bosire Nyamori, a law lecturer at the University of Nairobi told the Business Daily.

Mr Bosire added that compliance is especially frustrating for foreigners who do not understand cultural practices among regulators and authorities, giving the example of failure to respond to official correspondents.