New Tax Rates Effective April 2020

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%

 

 

Particulars Per Month Annually
Personal Relief 2,400 28,800
Insurance Relief 5,000 60,000
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
Disability Exemption 150,000 1,800,000

 

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.

Corporation Tax

  • Standard rate reduced from 30% to 25%.
  1. HOSP contributions will cease to be allowable as from 1st January 2021


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