A tax break announced by the Kenyan government in April to protect people from the effects of COVID-19 will end on December 30, the finance minister said on Friday.
Finance Minister Ukur Yatani said tax breaks are a temporary measure to help Kenyan businesses and critically relieve the most vulnerable people in society, even though the lack of taxpayers’ money is hurting the Kenyan economy and government planning.
“It has therefore become necessary to return to the pre-COVID-19 tax rates with effect from January 1, 2021,” said Yatani.
In April, the National Treasury Department cut corporate, individual income (PAYE) and Value Added Tax (VAT) rates to protect individuals and businesses from the adverse effects of the COVID-19 pandemic.
Yatani made it clear that the tax rates were not new, they simply went back to tax rates before the pandemic began.
Since Kenya reported its first COVID-19 case in March, the government has taken rapid action in a new tax law (amendment) of 2020 effective April 25 to mitigate the impact of COVID-19 on the Kenyan economy.
The measures have reduced both corporate income tax for resident companies and the highest individual income tax from 30% to 25%.
Additionally, the incomes of those earning less than KES 24,000.00 (US $ 216) per month were fully (100%) exempt from Pay As You Earn (PAYE) tax.
From January 1st, the corporate income tax rate will be reset from the current 25% to 30%, the individual income tax rate from the current 25% to 30% and the value added tax (VAT) rate from 16% to 16%, the current 14%.
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