The Kenya Revenue Authority (KRA) has maintained rules that do not allow tax deduction for the higher loan loss provisions expected with the new accounting guidelines, setting commercial banks on the path to lower profitability, industry insiders said.
The new accounting rules, known as the International Financial Reporting Standard 9 (IFRS 9), came into effect at the beginning of this year and require banks to make larger provisions for expected loan losses rather than actual losses incurred.
