Kenya: Low Income Earners Get 100% Tax Relief, as Kenyatta Reduces Major Taxes to Cushion Kenyans

Nairobi — President Uhuru Kenyatta has ordered for a hundred percent tax relief for persons earning gross monthly income of up to Sh24,000, as part of measures announced to cushion Kenyans against the impact of the coronavirus pandemic.

Kenyatta has also ordered for the reduction of income tax rate (Pay-As-You-Earn) from 30 percent to 25 percent.

Other taxes that have seen a reduction include the reduction of resident income tax from 30 percent to 25 percent, and the reduction of turnover tax rate from the current 3 percent to 1 percent.

Turnover tax came into effect in January, and targets micro, small and medium enterprises who have been hit hard by the pandemic.

Kenyatta also ordered the National Treasury to effect an immediate reduction of the VAT from 16 percent to 14 percent, effective 1st April,2020.

He also ordered that the Kenya Revenue Authority expedite the payment of all verified VAT refund claims amounting to Sh10 Billion within 3 weeks or in the alternative, allow for offsetting of Withholding VAT, in order to improve cash flows for businesses.

"I am also asking that all Ministries and Departments shall cause the payment of at least of Sh13 Billion of the verified pending bills, within three weeks from the date hereof," he said.

"Similarly, and to improve liquidity in the economy and ensure businesses remain afloat by enhancing their cash flows, the private sector is also encouraged to clear all outstanding payments among themselves; within three weeks from the date hereof," he added.

Kenyatta spoke at State House Nairobi when he announced a raft of new measures of combatting the outbreak of the pandemic.

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