Lucky Kenyans Who Will Be Spared as KRA Resumes High Taxes

  • Kenya Revenue Authority signage on a building
    Kenya Revenue Authority signage on a building
  • Treasury Cabinet Secretary Ukur Yatani has announced that Kenyans earning less than Ksh24,000 would be spared as the tax relief measures that were initiated during the Covid-19 pandemic are reverted in January 2021.

    "The government will continue to cushion the low-income earners, by retaining 100% tax exemption/ relief for those earning monthly incomes of Ksh 24,000 and below," CS Yatani stated in a statement on December 4, 2020.

    In a statement, the CS disclosed that as of January 1, 2021, the corporate tax rate reverts to 30% from the current 25% while the individual Income tax rate reverts to 30% from the current 25% for those earning above Ksh24,000.

    The Value Added Tax rate (VAT) on products will revert to 16% from the current 14%.

    Treasury CS Ukur Yatani speaking at Ole Sereni on Wednesday, August 26, 2020
    Treasury CS Ukur Yatani speaking at Ole Sereni on Wednesday, August 26, 2020

    "In the respect of the foregoing, and given the easing of some of the containment measures and subsequent resumption of normalcy, it has, therefore, become necessary to return to the pre-Covid 19 tax rates."

    "It is important to note that these are not new taxes, but just a return to the prevailing tax rate before the onset of the pandemic," he noted.

    CS Yatani stated that by December 31, 2020, the government will have foregone tax revenues totaling Ksh65 billion, over the course of the preceding seven months.

    "This in due course has and will affect the implementation of the government's priority programmes under the Big Four agenda and the recovery of the economy in general," he stated.

    At the same time, he stated the government would continue to roll out interventions under the Ksh58.1 billion Economic Stimulus Programme (ESP), such as Kazi Mtaani and others, to cushion vulnerable citizens and also enhance the liquidity of businesses.

    He further stated that the government had rolled out a medium-term Economic Recovery Strategy that would re-position the economy on a path to prosperity.

    "In spite of the pandemic's effects, it is noteworthy that the National Treasury and planning has continued to maintain macro-economic stability as evidenced by the prevailing low and stable inflation and interest rates as well as a competitive exchange rate," he added.

    Kenyan Currency notes.
    Kenyan currency notes.

    A finance expert, Kavata Kiaro, who spoke to disclosed that a reversal to the old rates with the economy in its current state would mean that a majority of Kenyans would be hit hard as the pandemic is yet to be deemed as being under control.

    Countless businesses have been forced to close shop in the aftermath of the global pandemic. At least 1.5 million Kenyans have lost their jobs or have been put on indefinite unpaid leave as the Covid-19 morphs into a major job crisis.