President Uhuru Kenyatta today at State House, Nairobi signed into law the Tax Laws (Amendment) Bill, 2020.
The amended law, which mainly targets low-income earners, includes a 100 per cent Pay As You Earn (PAYE) tax relief for employees earning less than Sh28,000 per month and further lowers turnover tax rate from 3 per cent to 1 per cent.
Those earning above the new threshold will benefit from a PAYE tax reduction of 5 per cent.
Similarly, the new Act has revised Corporation Tax to 25 per cent while Non-Resident Tax on Dividends has been adjusted from 10 to 15 per cent.
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The amended law also lowers the Value Added Tax rate from 16 to 14 per cent, a move that is expected to lower the shelf prices of basic commodities.
The new tax law amends several statutes to cushion the economy and Kenyans against the effects of the Covid-19 pandemic, according to the Head of State.
The Amendment Bill, which was published on March 30, 2020, has amended tax-related laws in Kenya including the Income Tax Act (CAP 470), the Value Added Tax Act of 2013, the Excise Duty Act (2015), the Tax Procedures Act (2015), Miscellaneous Levies and Fees Act (2016) and the Retirement Benefits Act (1997).
The amendments include a raise in the threshold for turnover tax to between Sh1 million and Sh50 million so as to exclude small-scale traders from the presumptive tax.
The new Act, has amended Section 38 of the Retirement Benefits Act (1997) to allow access to retirement benefits for purposes of purchase of a residential house. This is aimed at increasing homeownership in the country as envisaged in the housing pillar under the Big 4 Agenda.
The Bill, which was presented to the President for signature by National Assembly Speaker Justin Muturi was passed by Parliament on Wednesday this week.
Present during the brief signing ceremony were National Assembly Majority Leader Aden Duale, National Treasury Cabinet Secretary Ukur Yatani, Solicitor General Ken Ogeto, State House Chief of Staff Nzioka Waita, National Assembly Clerk Michael Sialai and State House Deputy Chief of Staff Njee Muturi.
