This archive report was first published on 20 April 2020.
On March 25, 2020, President Uhuru Kenyatta announced a raft of tax measures to support the economy during the COVID-19 pandemic. One of the measures included a reduction in the Value-Added Tax (VAT) rate from 16 to 14 percent, effective April 1, 2020.
The President also directed the Kenya Revenue Authority (KRA) to pay all verified VAT refund claims to the tune of Sh10 billion within three weeks. This move was expected to provide relief to businesses involved in cross-border trade, such as those in the horticulture and floriculture value chains.
However, the National Treasury has proposed changes in the Tax Laws Amendment Bill, 2020, which could increase the costs of certain goods and services to taxpayers. The bill seeks to amend the VAT Act by standard rating numerous goods and services that are currently either zero-rated or exempt.
According to the bill, the proposed changes will lead to greater revenue generation for the government. However, critics argue that the changes will increase the prices of basic commodities such as milk, bread, and medicaments, which could have a negative impact on the population during these uncertain times.
