President Uhuru Kenyatta has urged Kenyans to embrace tax-paying obligations which will aid the government in achieving its development agenda. Uhuru declared that he will not lower taxes after the Kenya Revenue Authority (KRA) introduced new taxes in January 2021.
The Head of State made the declaration while speaking at the National Cargo Deconsolidation Centre in Nairobi, on Wednesday, February 10.
"I will not lower taxes. You will have to pay because there is no other way we can build facilities, roads, and schools. We must pay taxes.
"The only thing we can do is making the remittance of taxes easier to avoid stalling business," he said. Kenyatta is racing against time to achieve his legacy through the Big 4 Agenda, 18 months prior to retirement.
In November 2020, Uhuru applauded the KRA for maintaining its tradition of excellence in tax administration despite the country facing the Covid-19 crisis.
KRA hit a new record high in the collection of tax amassing Ksh 1.607 trillion for the financial year 2019/2020 as compared to Ksh 1.580 trillion collected over the same period between July 2018 and July 2019.
KRA aims at collecting Ksh1.57 trillion for the financial year 2020/21. The taxman introduced Minimum Tax and Digital as part of the new diverse revenue enhancement measures.
Minimum Tax will apply to all businesses, whether they make a profit or not. KRA charges 1 percent of all gross sales.
Digital Tax is remitted by business people who offer services through a digital marketplace. KRA charges them 1.5 percent of the gross transactional value.
Others include leveraging on information technology to improve revenue collection through the use of third party data and automation of processes to improve Value Added Tax collection (VAT), comprehensive audit of exemptions to identify multiple uses of single exemption and making relevant tax demand and integration of government systems to allow for the third-party data matching to improve service delivery.
The Treasury also reverted the tax reliefs Kenyans enjoyed during the Covid-19 pandemic. Corporate Tax was reverted to 30 percent from 25 percent, the Individual Income Tax rate to 30 percent from 25 percent and the Value Added Tax rate (VAT) to 16 percent from 14 percent in January 2021.
