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Highlights of Kenya’s Covid-19 Financial Measures

President Uhuru Kenyatta announces financial measures to cushion Kenyans against impact of COVID-19

The government has come up with financial measures, aimed at cushioning  Kenyans from the impact of the COVID-19 pandemic.

On 25 March, President Uhuru  Kenyatta in a national address highlighted a few tax interventions, which included a reduction directive to the National Treasury to reduce the rate of VAT from 16 percent to 14 percent, with effect from 1 April 2020.

Below is a list of all tax measures the government has introduced to cushion Kenyans from the impact of Corona virus.

Pay As You Earn (PAYE)

In an effort t0 increase disposable income, President Kenyatta directed that PAYE be reduced to 25 percent and all Kenyans earning an income of KES 24,000 and below be exempt from PAYE.

PAYE is charged on a graduated scale at the rate of between 10 percent to 30 percent.

Turnover tax (TOT)

According to the  Finance Act 2019,  any resident person whose turnover from business does not exceed or is not expected to exceed KES. 5,000,000 during any year of income is required ti pay a TOT of 3 percent.

President Kenyatta directed that the TOT rate be reduced to 1 percent.

Corporation tax 

The standard rate of corporation tax has been reduced from 30 percent to 25 percent.

Non- Tax Financial Measures to Cushion Kenyans Against Corona virus

Social Fund

President Uhuru Kenyatta further directed that Sh 10 billion be set aside for the elderly, orphans and other vulnerable members of our society through cash-transfers by the Ministry of Labour and Social Protection.

Government Ministries and Departments were also directed  to release pending payments of at least KES 13 billion to suppliers within the next three weeks.

Top government officials were also asked to take a voluntary reduction of salaries of between 80 percent and 20 percent. President Kenyatta further announced that together with  his deputy William Ruto they had taken a 80% salary cut.

He also called for  a temporary suspension of negative listings with the Credit Reference Bureau effective 1 April 2020 for borrowers whose loans fall overdue or are in arrears.

 

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