President Kenyatta approves tax relief measures cushioning Kenyans from Covid-19

President Uhuru Kenyatta has assented the 2020, Tax Laws (Ammendments) Bill into law passing on relief to Kenyans as part of government relief measures.

The Bill was presented to the President for signing by National Assembly Speaker Justin Muturi following its passage in Parliament on Wednesday night.

As part of the relief measures, Kenyans earning Ksh.24000 and below will receive a 100 percent waiver on pay as you earn (PAYE) while earners above the threshold will see their PAYE discounted by five percent.

The ammendments to various tax laws are meant to cushion the economy and Kenyans against effects of the Covid-19 pandemic as announced by President Kenyatta on March 25.

“In recognition of the extra-ordinary nature of this global tragedy and its enormous local effects, and conscious of the solemn duty of the government to guarantee the enjoyment of social, civil and economic rights; my administration has made and will continue to make targeted state interventions to cushion every Kenyan from shocks arising from Covid-19,” President Kenyatta said in a televised address to the nation.

Other relief measures contained in the now Act of Parliament brings relief to small and medium enterprises (SMEs) where the threshold for turnover tax (TOT)  businesses  with annual turnovers above Ksh.1 million relieving those with lesser earnings from the tax.

The rate of TOT for SMEs with higher turnovers was meanwhile reduced from three to one percent while the rate of corporation tax/resident income was reduced from 30 to 25 percent.

At the start of the month, the National Treasury through a legal notice had implemented the lowering of value added tax (VAT) rate from 16 to 14 percent in line with the cushion measures.

Wednesday’s vote by MPs propped up the size of cushioning by throwing out additional supplements attached to the Bill by the National Treasury which would have eroded gains pronounced by the President.

The additional supplements would have raised the cost of goods to Kenyans by removing key exemptions.

The retention of the respective exemptions maintained costs of common consumer basket items including fuel, LPG, pest control products, agriculture machinery and milk by offsetting proposals to move the items to the vatable goods category.

The new relief measures are now expected to kick in immediately.

However some employees will miss out on the immediate PAYE relief with some employers having closed off payrolls for salaries due at the end of April prior to the assent.