Treasury to reintroduce pre-Covid taxes starting Jan 1, 2021; income tax to revert to 30pc from current 25pc, corporate tax to 30pc from 25pc and VAT to 16pc from 14pc.
Treasury Cabinet Secretary Ukur Yatani said those earning below Sh24, 000 will continue enjoying 100% tax relief by exempting them from Pay As You Earn (PAYE) tax.
“However, the government will continue to cushion the low-income earners, by retaining 100 per cent tax exemption/relief for those earning monthly incomes of Sh24,000 and below,” Yatani said.
The CS said that effective from January 1, 2021, the Corporate Tax rate will revert to 30 per cent from the current 25 per cent.
The individual Income of Tax rate (VAT) will revert to 16 per cent from the current 25 per cent and the Value Added Tax rate VAT will revert to 16 per cent from the current 14 per cent.
By December 31, 2020, Kenya will have foregone tax revenues amounting to Sh65 billion in the current financial year.
CS Yatani says the decline in revenue has and will affect the implementation if the government’s priority programmes under the Big Four Agenda and the recovery of the economy in general.
“In respect to 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 effective 1st January 2020,” he said in a statement.
Yatani added that the State will also continue to roll-out interventions under the Sh58.1 billion Economic Stimulus Programme (ESP) to cushion vulnerable citizens and also enhance the liquidity of businesses.
Kenyans reacted with bitterness some terming the move as an slap on their faces amidst the harsh economic situation. “I thought you’re smart kumbe ni bure tu..you reduced when fake cases were at 100 now covid 19 is hitting us hard u want to increase!!!!” Smart Sam via FB
Nicholas Mwendia via Facebook “Poor and wicked regimn ruining our mother country. Dear God intervene for our mother country ?? Our leaders are stealing from us in broad daylight while no improvement on our daily needs.no job’s,no better education facilities,no affordable hospital services, nothing good at all in Kenya. This country should be closed for some renovation and rebooting ??
Sheila Barasa wrote “This guy has borrowed alot of money so now we have to pay back by force we are just slaves in this economy”