- April 23, 2020
- Posted by: bloomgcfo
- Category: Tax
Following the outbreak of COVID- 19 around the world and the virus being declared a global pandemic, there has been a significant negative impact on economies around the world. To shield this, countries have been forced to come up with economic measures to contain the health crisis as well as to economically support their citizens and businesses.
The Kenyan government, in particular, has instituted tax reliefs to its citizens following the assent of the Tax Laws Amendment Bill 2020, new tax rates for Kenyan PAYE come into effect from April 2020. The rates are an update from the previous PAYE 2018 rates.
PAYE rates in effect from 25th April 2020
|Monthly Taxable Pay||Annual Taxable Pay||Rate of Tax|
|0 – 24,000||0 -288,000||10%|
|24,000 – 40,667||288,001 – 488,000||15%|
|40,668 – 57,334||488,001 – 688,000||20%|
|Above 57,334||Above 688,000||25%|
|Allowable Pension Fund Contribution||20,000||240,000|
|Allowable HOSP Contribution||8,000||96,000|
|Affordable Housing Relief||9,000||108,000|
|Allowable Owner Occupier Internet||25,000||300,000|
Income tax New PAYE Rates 2020 in Kenya)
- 100% tax relief for individuals earning a gross monthly income of up to KES 24,000.
- Reduction of PAYE rate from 30 percent to 25 percent.
- Personal Relief: KES 1,408.00 to KES. 2,400 per month
- Minimum Taxable Income: KES 24,001 per month
Turnover Tax Rate
- Reduction of turnover rate from 3% to 1% for sole proprietors.
Value Added Tax
- Reduction of value-added standard rate tax from 16% to 14%.
- VAT refunds: KRA to approve and release verified VAT refund claims and allow for offsetting VAT. Payment of VAT refunds will help businesses that need cash for their survival during the impacts of COVID 19.
- Standard rate reduced from 30% to 25%.
- HOSP contributions will cease to be allowable as from 1st January 2021