A tax reprieve announced by the Kenyan government in April to cushion people from the effects of COVID-19 will end on Dec. 30, the treasury minister announced on Friday.
Treasury Minister Ukur Yatani said tax relief was a temporary measure necessary to support Kenyan businesses and provide critical relief to the most vulnerable in society, though the lack of tax funds was having a toll on the Kenyan economy and government planning.
“It has, therefore, become necessary to return to the pre-COVID-19 tax rates, effective 1st January 2021,” Yatani said.
In April, the National Treasury lowered corporate, Individual Income (PAYE) and Value Added Tax (VAT) rates as part of the government’s efforts to cushion individuals and businesses from the adverse effects of the COVID-19 pandemic.
Yatani clarified the tax rates were not new but just reverting to the tax rates before the onset of the pandemic.
Since Kenya reported its first COVID-19 case in March, the government swiftly moved in to mitigate the effects of COVID-19 to the Kenyan economy, in a new Tax Law (Amendment) Act, 2020 with effect from April 25.
The measures lowered both corporate tax for resident entities and top individual income tax from 30% to 25%.
In addition, incomes of individuals earning less than KES 24,000.00 ($216) per month were fully exempted (l00%) from Pay As You Earn (PAYE) tax.
From Jan. 1, the Corporate Tax rate will revert to 30% from the current 25%, the Individual Income Tax rate will revert to 30% from the current 25% and the Value Added Tax rate (VAT) will revert to 16% from the current 14%.
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