KRA loses fight for tax deduction on bad bank loans

KRA

KRA headquarters at Times Tower, Nairobi.

Photo credit: File | Nation Media Group

The Kenya Revenue Authority (KRA) has lost its bid to deny Consolidated Bank of Kenya a Sh264.9 million bad debt tax deduction tied to unpaid loans by borrowers, marking a significant victory for the industry.

The Tax Appeals Tribunal ruled that the money a bank loses after customers fail to repay loans is a normal cost of running a lending business and can be deducted before tax is calculated.

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Note: The results are not exact but very close to the actual.