The President directed the National Treasury to implement the following with immediate effect. These measures are aimed at cushioning Kenyans from the economic shocks arising from COVID-19. Some of the proposed measures by the President will require parliamentary approval as mandated by the Laws of Kenya. Our view is that these will become effective from 1st April 2020.
- 100% tax relief for persons earning a gross monthly income of up to KShs. 24,000. This effectively raises the monthly relief from KShs. 1,408 per month to KShs. 2,991 per month
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The top tax bracket for Pay-As-You-Earn has been reduced from 30% to 25%. This means that monthly income above KShs. 47,059 will be taxed at 25%
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Reduction of corporation tax from 30% to 25%. While the effective date has not been clarified, our view is that this will be for the financial year commencing 1st January 2020. No changes have been made to taxation of branches of foreign companies, which will continue to be taxed at 37.5%
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Reduction of the turnover tax rate from the current 3% to 1% for businesses where the annual turnover is below KShs. 5 million
- Reduction of VAT from 16% to 14%, effective 1st April 2020
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The Kenya Revenue Authority (KRA) to expedite payments of all verified VAT refund claims amounting to KShs. 10 billion within 3 weeks; or in the alternative, allow for offsetting of withholding VAT, in order to improve cash flows for businesses
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Allocation of an additional KShs. 10 billion to the elderly, orphans and other vulnerable members of our society through cash-transfers by the Ministry of Labour and Social Protection
- Temporary suspension of the listing with the Credit Reference Bureaus (CRB) of any person or corporate entities whose loan account fall overdue or is in arrears from 1st April 2020
- Ministries and departments to pay KShs. 13 billion of verified pending bills, within 3 weeks
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KShs. 1 billion from the Universal Health Coverage kitty, be used for recruitment of additional health workers to support in the management of the spread of COVID-19