Kenyan firms are the third most-taxed in the six-nation East African Community (EAC) bloc after Tanzania and Burundi, a survey by financial consultancy PricewaterhouseCoopers (PwC) shows.
The PwC Paying Taxes 2019 report released Wednesday showed that a business in Nairobi paid a total tax contribution rate (which includes labour and other tax deductions) of 37.2 per cent of its profit in 2017, from 37.1 per cent in 2016.
This is only higher than Tanzania’s 44 per cent and Burundi’s 41.2 per cent the report, which uses a medium-sized domestic company to calculate taxes on businesses, shows.
Firms in EAC’s newest member country, South Sudan, pay the lowest average tax rate of 31.4 per cent on profit, followed by Rwanda (33.2 per cent) and Uganda (33.7 per cent). Kenya’s tax regime is also higher than some of its biggest competitors for foreign direct investments (FDIs) such as South Africa (29.1 per cent), Ghana (32.4 per cent) and Nigeria (34.8 per cent).
The total tax and contribution rate in Ethiopia — which in 2016 outgrew Kenya to become the largest economy in eastern Africa — is higher at 37.7 per cent, the PwC report shows.
Nairobi, however, remains a tax-friendlier investment destination with the total tax burden shouldered by businesses 9.9 percentage points less than Africa’s average of 47 per cent and 3.2 percentage points lower than the global average.