This archive report was first published on 22 April 2020.
President Uhuru Kenyatta's tax relief proposals for Kenyans are stuck in Parliament, with the National Assembly yet to approve the measures.
According to a tweet by the Kenya Revenue Authority (KRA) on April 22, 2020, the proposal is a bill that has not yet been approved by lawmakers, and will therefore not take effect this month.
Clive Akora, a partner at KPMG Kenya, echoed KRA's tweet, stating that the President's proposals could only be implemented after obtaining approval from the National Assembly.
“The approval must be done through deliberation by members of the National Assembly as per requirements of the Kenyan Constitution,” Akora said.
President Kenyatta had outlined various tax interventions on March 25, 2020, aimed at cushioning the country against the economic effects of Covid-19. The proposals mainly targeted low-income earners and included a 100 per cent tax relief of Pay As You Earn (PAYE) for those earning less than Sh24,000 per month.
Employees earning more than Sh24,000 were to get a reduction from 30 per cent to 25 per cent on the same. However, Akora noted that the President was unclear on whether persons earning between Sh24,000 and the top tax rate threshold of KSh 47,059 would get tax relief on their income.
“In our view, the best way to provide the tax incentive would be to apply the 5 per cent PAYE rate reduction across all the PAYE tax bands,” Akora weighed in.
The proposed measures included a reduction of turnover tax (TOT) from 3 per cent to 1 per cent and a reduction in value-added tax (VAT) from 16 per cent to 14 per cent.
