Tax relief, CRB-listing suspension: Here are all directives issued by Pres. Kenyatta to ensure you have more money in your pocket

By Brian Okoth On Wed, 25 Mar, 2020 18:55 | 2 mins read
President Kenyatta on March 25 announced measures to cushion Kenyans against tough economic times arising from coronavirus crisis. [PHOTO | FILE]
President Kenyatta on March 25. [PHOTO | FILE]
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    President Uhuru Kenyatta on Wednesday, March 25, announced measures to cushion Kenyans against tough economic times arising from coronavirus crisis.

President Uhuru Kenyatta on Wednesday, March 25, announced measures to cushion Kenyans against tough economic times arising from coronavirus crisis.

Ranging from tax reductions, to ordering State departments to expedite payments of pending bills, the Head of State said the decisions he has arrived at will help Kenyans remain financially afloat as the Government commits to battling the virus, whose confirmed cases in the country stood at 28 as of Wednesday, Mach 25.

Below are some of the tax reliefs and measures President Kenyatta said would help reduce financial uncertainty among Kenyans:

  • 100% tax relief to Kenyans earning Ksh24, 000 and below.
  • Pay as you earn (PAYE) reduction from a maximum of 30% to 25%.
  • Reduction of turnover tax rate from 3% to 1% for all micro, small and medium enterprises.
  • Reduction of resident income tax to 25%.
  • The Government to make available Ksh10 billion to vulnerable groups including the elderly and orphans, among others. This, the president, said will be done through cash transfers from the Ministry of Labour and Social Protection.
  • Temporary suspension of the listing of loan defaulters with the Credit Reference Bureau (CRB) of any person, micro, small and medium enterprise and corporate entities whose loan account is in arrears effective April 1, 2020.
  • Reduction of VAT from 16% to 14% effective April 1, 2020.
  • All ministries and State departments to make payments amounting to Ksh30 billion to those owed monies by the Government. This, the president said, must be done within three weeks from March 25. The Head of State also urged the private sector to clear pending bills.
  • KRA to expedite payment of all VAT refunds amounting to Ksh10 billion, or allow withholding of offsetting VAT. This, President Kenyatta said, must happen within three weeks.
  • Ksh1 billion from the Universal Health Coverage kitty be channeled to the employment of new health workers to help combat the spread of COVID-19.
  • The president and his deputy to take 80% pay-cut, all Cabinet Secretaries to take 30% pay-cuts, Chief Administrative Secretaries (30%) and Principal Secretaries (20%).
  • All State and public officers aged 50 and above; and have preexisting medical conditions, to take leave from work, or be allowed to work from home. This directive excludes those public officers working in the security department.
  • CBK to lower the Central Bank Rate from 8.25% to 7.25%.
  • Reduce the Cash Reserve Ratio from 5.25% to 4.25%. The president said this will help increase liquidity of Ksh35 billion to commercial banks, which, in turn, will be in positions to provide loan services to “distressed Kenyans”.
  • CBK directed to provide flexibility to bank loan classifications and loans performing as at March 2, 2020.

All the above proposals can only be ratified by the National Assembly, and the National Treasury Cabinet Secretary Ukur Yatani has been directed to present them before Parliament for approval before April 1, 2020.

Other directives

The Head of State also directed Cabinet sittings chaired by Interior minister Fred Matiang’i be held twice a week, up from once a week. President Kenyatta said the sittings should be focused on the impact of the virus on the Kenyan people.

The president further announced a national 7pm to 5am curfew to all Kenyans beginning Friday, March 27. Health workers and essential service providers are excluded from those affected by the curfew. President Kenyatta said a full list of essential service providers will be made available soon.

The Head of State also directed that the management of the Kenya ferry Services be vested in the National Police Service.

“The Coast Guard Service and all citizens are expected to obey all rules procedures set out for crossing the ferry channel,” said President Kenyatta.

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