Coronavirus Crisis: Uhuru Signs Bill Reducing Tax on Salaries

President Uhuru Kenyatta signs into law, the tax laws (amendment) Bill 2020 on April 25, 2020. /PSCU
By :
AT Reporter

Nairobi, Kenya – President Uhuru Kenyatta has signed into law, the tax laws (amendment) Bill, 2020.

The Bill, which was presented to the president for signature by National Assembly Speaker Justin Muturi was passed by Parliament on Wednesday, April 22.

The new tax law amends several statutes that are intended to help cushion the Kenyan economy and her citizens from effects of the coronavirus pandemic that halted normal operations in Kenya from Friday, March 13 when the first COVID-19 case was reported.

Uhuru signed the amendment bill on Saturday, April 25, at State House, Nairobi. The Bill which was published on Monday, March 30, amended tax-related laws in Kenya including the retirement benefits act (1997), the value added tax act of 2013, the excise duty act (2015), the tax procedures act (2015), miscellaneous levies and fees Act (2016) and the income tax act (CAP 470),

The amendments included the raise in the threshold for turnover tax to between one million and fifty million shillings so as to exclude small-scale traders from the presumptive tax. It further reduced turnover tax rate from 3% to 1%.

According to President Kenyatta, the amended law mainly targets low-income earners, and includes a 100% pay as you earn (PAYE) tax relief for employees earning less than KSh 28,000 per month. Those earning above the new threshold would benefit from a PAYE tax reduction from 30% to 25%.

Corporation tax has also been revised to 25% while non-resident tax on dividends was adjusted from 10 to 15%. Additionally, the value added tax rate that was amended downwards from 16 to 14%, is being praised as a move that will help bring down the shelf prices of basic commodities.

In a bid to increase home ownership in the country as envisaged in the housing pillar under the Big Four Agenda, section 38 of the Retirement Benefits Act (1997) was amended to allow access of retirement benefits for purposes of purchase of a residential house.

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