President Uhuru signs law for major tax reliefs
With the Covid-19 burden, President Uhuru signs bill reducing tax on salaries.
President Uhuru Kenyatta on Saturday signed into law the Tax Laws (Amendment) Bill, 2020 as part of measures to cushion the public against the effects of the Covid-19 pandemic.
The bill amends tax-related laws including Income Tax Act (CAP 470), Value Added Tax Act of 2013, Excise Duty Act (2015), Tax Procedures Act (2015), Miscellaneous Levies and Fees Act (2016) and Retirement Benefits Act, 1997.
Amendments include a rise in the threshold for a turnover tax to between Sh1 million and Sh50 million so as to exclude small-scale traders from the presumptive tax.
The president said the new “law amends several statutes to cushion the economy and Kenyans against the effects of the Covid-19 pandemic as announced by the Head of State.”
The new law further lowers the turnover tax rate from three to one percent.
The law, which mainly targets low-income earners, includes a 100 percent Pay As You Earn (Paye) tax relief for employees earning less than Sh28,000 per month. The previously announced threshold was Sh24,000.
Those earning above the new threshold will benefit from a Payee tax reduction of between 30 and 25 percent.
It lowers the Value Added Tax rate from 16 to 14 percent, a move that is expected to lower the shelf prices of basic commodities.
The law has amended Section 38 of the Retirement Benefits Act (1997) to allow access to retirement benefits for purposes of purchase of a residential house.
This is aimed at increasing home ownership in the country as envisaged under the housing pillar of the Big Four Agenda.
The signing was witnessed by National Assembly Majority Leader Aden Duale, Treasury Cabinet Secretary Ukur Yatani, Solicitor-General Ken Ogeto, State House Chief of Staff Nzioka Waita, National Assembly Clerk Michael Sialai and State House Deputy Chief of Staff Njee Muturi.