Background

The President assented to The Tax Laws (Amendment) Act, 2020 and this was gazetted on 27th April 2020. This now brings into effect all the tax relief measures aimed at alleviating the effects of the Covid-19 pandemic on individuals and businesses. We highlight the following changes in tax rates:

Individual tax rates Rate
On the first Shs. 288,000 p.a 10%
On the next Shs. 200,000 p.a 15%
On the next Shs. 200,000 p.a 20%
On all income above Shs. 688,000 p.a 25%

 

This is effective from the day of assent and the rates are applicable to payrolls for the month of April 2020 as well.

Corporate Tax rate

This has been reduced from 30% to 25% for the year of income 2020 and thereafter.

Pension Tax Rates  

The new annual tax bands in respect of a payment of a pension or any withdrawal made after the expiry of fifteen years from the date of joining the fund, in excess of the specified tax free amounts, are:

Rate
On the first Shs. 400,000 10%
On the next Shs. 400,000 15%
On the next Shs. 400,000 20%
On any amount above Shs. 1,200,000 25%

 

The individual tax rates in (1) above will apply in respect to a withdrawal before the expiry of 15 years. This is applicable from the month of April 2020.

Turnover Tax rate

The turnover tax rate has been reduced from 3% to 1% with effect from the assent date. Additional change is that turnover tax shall applicable to any resident person whose turnover from business is more than one million shillings but does not exceed or is not expected to exceed fifty million shillings during any year of income. This is effective from the date of assent.

For additional information with respect to this tax alert, please contact:

Beatrice Kamau

Outsourced Services Manager

t +254 715 248882 | +254 733 533449
e bkamau@mgkconsult.co.ke