Parliament to rubber stamp COVID-19 tax reversals


Parliament to rubber stamp COVID-19 tax reversals
File image of the National Assembly during a past session. PHOTO| COURTESY

In Summary

  • Members of Parliament (MPs) are expected to give the seal of approval for the reversals contained in the Tax Laws (Ammendment) (No.2) Bill, 2020.
  • Among the desired tax reversals by the National Treasury include the reinstatement of the maximum rate of pay as you earn (PAYE) to 30 per cent and the reversal of the corporate tax rate to 30 per cent from 25 per cent.
  • The looming end of the tax relief measures has been viewed as a blow to personal incomes as the Kenyan economy continues to bleed from the pandemic.
 

The National Assembly is expected to give the final nod on the reversal of tax relief measures effected at the start of the COVID-19 pandemic.

Members of Parliament (MPs) are expected to give the seal of approval for the reversals contained in the Tax Laws (Ammendment) (No.2) Bill, 2020.

Among the desired tax reversals by the National Treasury include the reinstatement of the maximum rate of pay as you earn (PAYE) to 30 per cent and the reversal of the corporate tax rate to 30 per cent from 25 per cent.

In a public statement issued on Tuesday, National Assembly Clerk Michael Sialai opened the bill up for public participation with for the next seven days to December 15.

The legislative arm is expected to receive comments from interested members of public and organization ahead of the consideration of the bill by the house.

Meanwhile, the bill carrying the proposed ammendments has been committed to the departmental committee on Finance and National Planning ahead of its introduction to the floor of the house.

Nevertheless, it remains unclear on whether the National Assembly will hold a special sitting to pass the bill before the desired reversal of the tax laws on January 1, 2021.

On Friday last week, the National Treasury indicated it had moved to cut off the COVID-19 occasioned tax relief measures as it sort to recover lost government revenues.

“It is important to note that these are not new tax rates, but just a return to the prevailing tax rate before the onset of the pandemic. This is indeed within the knowledge of all stakeholders,” stated Treasury Cabinet Secretary Ukur Yatani.

The move was advanced at the behest of President Uhuru Kenyatta who in September signalled the end of part of the tax relief measures.

Included in the tax reversal plan is the reinstatement of the value added tax rate (VAT) to 16 from 14 per cent. The change does not however require requisite Parliament approval.

The National Treasury tabulated the cost of the tax relief measures offered by government at Ksh.65 billion in the form of forgone government revenues.

The looming end of the tax relief measures has been viewed as a blow to personal incomes as the Kenyan economy continues to bleed from the pandemic.

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Story By Kepha Muiruri
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