NCBA Bank has convened faith-based institutions for its annual engagement forum, focusing on the latest tax compliance regulations for charitable organizations. Themed “Navigating Tax Reforms for Sustainability,” the forum provided a platform for discussions on the Income Tax (Charitable Organizations and Donations Exemption) Rules, 2024, which have introduced new compliance requirements for charitable institutions.
The new tax rules, enacted through Legal Notice No. 105 of 2024, replaced the Income Tax (Charitable Donations) Regulations of 2007, creating compliance challenges for many charitable organizations.
A Commitment to Supporting Faith-Based Institutions
Speaking at the event, Tirus Mwithiga, NCBA Group Director for Corporate Banking and Investment Advisory, emphasized NCBA’s commitment to nurturing long-term partnerships with faith-based institutions.
“We recognize the critical role that faith-based institutions play in social development, education, and humanitarian work. As a financial partner, NCBA is committed to providing advisory services and capacity-building to ensure these organizations remain compliant and financially sustainable,” he said.
He also underscored the need for collective efforts in capacity-building and tax compliance.
Key Insights from the Forum
Margaret Karanja, Chief Manager, Exemption, Policy, and Tax Advisory Division at KRA, highlighted poor documentation as a major challenge facing faith-based institutions in complying with the new tax rules. With the June 2025 compliance deadline fast approaching, she urged organizations to ensure proper documentation and take advantage of KRA’s automated tax exemption application system.
- The new tax rules include:
Cap on Donation Deductions – Donations can only be deducted up to 50% of total income, ensuring they do not create a taxable loss. - Business Income Exemption – Business income is exempt only if used exclusively for charitable purposes.
- Accumulation of Surplus Funds – Charitable organizations can retain up to 15% of total funds over three years.
- Strict Compliance Requirements – Organizations must provide proof of donations, budgets, and exemption certificates to qualify.
Ethical Taxation and Social Responsibility
Speaking at the forum, H.E. Most Reverend Herbert van Megen, Apostolic Nuncio to Kenya and Sudan, emphasized the moral responsibility of tax compliance.
“Give to Caesar what belongs to Caesar. Paying taxes is not just a legal duty but a moral obligation. Saint John Paul II called it an act of solidarity, ensuring the most vulnerable receive necessary support.”
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He also called for ethical taxation policies, ensuring that tax revenues are used for the common good and human development.
NCBA’s Role in Supporting Compliance and Financial Sustainability
NCBA reaffirmed its commitment to helping faith-based institutions navigate tax reforms by:
📌 Providing expert advisory services on tax exemption applications.
📌 Enhancing financial reporting and transparency to ensure compliance.
📌 Conducting capacity-building training with industry experts, including KRA and financial consultants.
The forum featured expert panelists from KRA, Grant Thornton, and the Kenya Conference of Catholic Bishops, showcasing NCBA’s dedication to empowering charitable institutions with financial and compliance strategies.
“Beyond practical assistance, NCBA is committed to fostering long-term partnerships with faith-based institutions, ensuring they continue their invaluable contributions to society,” concluded Mwithiga.