Relief For Kenyans As Gov’t Reduces PAYE Tax

President Uhuru Kenyatta. /Courtesy

President Uhuru Kenyata has announced a 100 per cent tax relief for people earning a monthly gross pay of up to Ksh24,000.

In a state of the nation address on Wednesday evening, the President also directed the reduction of the income tax, Paye As You Earn (PAYE), rate from its maximum of 30 to 25 per cent.

The president said the move was necessitated by the prevailing Coronavirus (COVID-19) crisis that has grossly affected the economy.

The Head of State ordered a reduction of resident income tax (corporation tax from 30 to 25.

Uhuru directed the National Treasury to facilitate a reduction of the turnover tax rate from the current 3 per cent to 1 per cent for all Micro, Small and Medium Enterprises (MSMEs).

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To cushion the elderly, orphans and other vulnerable members in the society from the adverse effects of COVID-19, the President directed that an additional Ksh10 billion to be allocated to the groups.

The President further ordered temporary suspension of the listing with Credit Reference Bureaus (CRB) of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account fall overdue or is in arrears, effective April 1, 2020.

On Valued Added Tax (VAT), the President directed the National Treasury to facilitate reduction of the rates from the current 16 per cent to 14 per cent effective April 1, 2020.

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The President ordered the Kenya Revenue Authority (KRA) to expedite refund claims amounting to Ksh. 10 Billion within 3 weeks; or in the alternative, allow for offsetting of Withholding VAT, in order to improve cash flows for businesses.

He directed all Ministries and Departments to release funds for verified pending bills of at least of Ksh13 Billion within three weeks.

“To improve liquidity in the economy and ensure businesses remain afloat by enhancing their cash flows, the private sector is also encouraged to clear all outstanding payments among themselves; within three weeks from the date hereof, ” the President said.

In sharing the burden occasioned by the global health pandemic, the Head of State offered a voluntary reduction in the salaries of the senior ranks of the National Executive.

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Written by Wycliffe Nyamasege

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