Tax Relief: KRA Reveals How Kenyans Pocketed Ksh65B

The Kenya Revenue Authority (KRA) has revealed that Kenyans pocketed Ksh65 billion in tax relief since Covid-19 pandemic hit in March.

In a statement carried in the dailies on Sunday, December 6, the taxman disclosed that the money arose as a result of tax incentive announced by President Uhuru Kenyatta eight months ago when the pandemic struck.

The incentives that took effect in April 2020, benefited Kenyans throughout the eight months until November 2020.

Some of the tax incentives that benefited the country included a reduction of Pay AS You Earn (PAYE) top rate from 30% to 25% and 100% tax relief for persons earning below Ksh24,000 per month.

President Uhuru Kenyatta speaks after awarding Presbyterian University of East Africa a charter at State House on Wednesday, December 2, 2020.

File

Others include a reduction of Corporate Tax rate from 30% to 25%, reduction of Value Added Tax (VAT) rate from 16% to 14% and a reduction of Turnover (TOT) rate from 3% to 1%.

"The measures have cumulatively transferred a net amount of Ksh65 billion to the Kenyan citizens' pocket for the period starting from April 2020 to end of November 2020.

"The amount represent revenue forgone by the government, which consequently reduced tax revenue collection," read the report in part.

It also indicated that the taxman missed its tax targets, collecting Ksh1,089.9 billion since March 2020 from a set target of Ksh1,276.1 billion.

KRA also noted that some of the funds was used in the procurement of Personal Protective Equipment, Engaging youth throughout the country through the Kazi Mtaani Programme, humanitarian relief assistance to support vulnerable families and procurement of desks and masks for schools.

"Beyond tax reductions, the government also expedited payment of VAT refunds by allocating an additional Ksh10 billion.

"This fund not only ejected more money into circulation but offered financial relief to businesses worst hit by the crisis especially those in the horticulture, transport and hospitality sectors of the economy," added the statement.

The tax incentives are set to expire in January 2021.

Times Towers in Nairobi which houses Kenya Revenue Authority’s head office. Thursday, February 20, 2020

Simon Kiragu

Kenyans.co.ke