The National Treasury on Friday, December 4, announced that the Government will — beginning January 1, 2021 — restore a taxation of 30% on corporate revenue and individual income.
The Value Added Tax (VAT), which is currently capped at 14%, will — beginning January 1, 2021 — also go back to 16%.
On April 22, 2020 Kenya’s Parliament approved a cut of 5 percentage points to the corporate income tax rate as part of President Uhuru Kenyatta’s measures to cushion the economy from the impact of the coronavirus crisis.
In a press statement Friday, Treasury Cabinet Secretary Ukur Yatani said Kenya, between end of April 2020 and December 31 2020, would have forgone Ksh65 billion, which ideally would have been pocketed by the taxman had the tax relief measures not been introduced.
Yatani says it is important that Kenya reverts to the pre-coronavirus crisis taxes to avert the grinding of government operations.
“This (tax relief) in due course has and will affect the implementation of the government’s priority programmes under the Big Four Agenda and the recovery of the economy in general,” said the minister.
“It is, [however], important to note that these are not new taxes, but just a return to the prevailing tax rate before the onset of the pandemic. This is indeed within the knowledge of all stakeholders.”
Yatani said the 100% tax relief on persons earning Ksh24,000 and below will, however, remain.
“Alongside these measures, the government will continue to roll out interventions under the Ksh58.1 billion Economic Stimulus Programme (ESP), such as Kazi Mtaani and others, to cushion vulnerable citizens and also enhance the liquidity of businesses,” said Yatani.