National Treasury Cabinet Secretary Ukur Yatani
Treasury Cabinet Secretary Ukur Yatani has announced that Kenyans earning less than Sh24,000 will be spared once the
tax relief measures that were initiated during the Coronavirus pandemic are reverted in January 2021.
Yatani on Friday said that the government will continue to cushion the low-income earners, by retaining 100% tax exemption/ relief for those earning monthly incomes of Sh24,000 and below.
In a statement, the CS disclosed that as of January 1, 2021, the corporate tax rate reverts to 30% from the current 25% while the individual Income tax rate reverts to 30% from the current 25% for those earning above Ksh24,000.
The Value Added Tax rate (VAT) on products will revert to 16% from the current 14%.
“In the respect of the foregoing, and given the easing of some of the containment measures and subsequent resumption of normalcy, it has, therefore, become necessary to return to the pre-Covid 19 tax rates. It is important to note that these are not new taxes, but just a return to the prevailing tax rate before the onset of the pandemic,” he noted.
CS Yatani stated that by December 31, 2020, the government will have foregone tax revenues totalling Ksh65 billion, over the course of the preceding seven months.
According to financial experts, a reversal to the old rates with the economy in its current state would mean that a majority of Kenyans would be hit hard as the pandemic is yet to be deemed as being under control.
Countless businesses have been forced to close shop in the aftermath of the global pandemic.
At least 1.5 million Kenyans have lost their jobs or have been put on indefinite unpaid leave as the Covid-19 morphs into a major job crisis.
