President Uhuru Kenyatta has today, April 25, 2020 signed into law the Tax Laws Amendment Bill aimed at cushioning citizens amid the Coronavirus pandemic that has affected the economy.
The Tax-related laws amended include Income Tax Act (CAP 470), the Value Added Tax Act of 2013, the Excise Duty Act (2015), the Tax Procedures Act (2015), the Miscellaneous Levies and Fees Act (2016) and the Retirement Benefits Act(1997).
The amendments detail the rise in the threshold for turnover tax to between Sh1 million and Sh50 million to exclude small-scale traders from the presumptive tax. The new law further lowers turnover tax rate from three to one percent.
According to the Head of State, the amendment targets to benefit low-income earners as there is a 100 percent Pay As You Earn (PAYE) tax relief for employees earning less than Sh28,000 per month.
Further, those earning above Sh28,000 will benefit from the PAYE tax reduction of between 30% and 25%.
Also reviewed is the Corporation Tax to 25 percent while the Non-Resident Tax on Dividends has been adjusted from 10 to 15 percent.
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The Value Added Tax rate (VAT) has also been lowered from 16 percent to 14 percent. This move is expected to lower the prices of basic commodities on shelves.
On March 25, 2020, the President through a presser announced the tax reductions stating that the move was necessitated by the prevailing Coronavirus crisis that has grossly affected the economy.
Currently, confirmed COVID-19 cases stand at 343 in the country with 14 fatalities and 98 recoveries.
Businesses have been adversely affected and some companies have been forced to close down while others have slashed down their employees’ salaries.