President Uhuru Kenyatta has scrapped all taxes for people earning below Ksh24,000 and also reduced Pay As You Earn (PAYE) to 25 percent from 30 percent. The President took such a move as one of the strategies to help Kenyans within the low salary bracket fight the impacts of the Corona Virus Pandemic.
Businesses were not left out; the President has reduced Corporate tax rate to 25 percent and turnover tax rate reduction to 1 percent from the original 3 percent. In addition, the Value Added Tax (VAT) has been reduced to 14 percent from 16 percent, effective April 1. These reductions will boost cash flow among businesses during this hard period as the government continues to fight the spread of Coronavirus.
Also, all Cabinet Secretaries (CSs), and CASs will undergo a voluntary pay cut of 30 percent and 20 percent for Permanent Secretaries (CSs). As for the president and his deputy, they will have a 80 percent pay cut as a drastic move to collect funds for the fight against Corona Virus Pandemic.
In Summary, the presidential directives included:
1. Treasury moves to Parliament
a). A 100% tax relief for 24,000 p/m earners.
b). Reduction of PAYE from 30% to 25%.
c). Reduction of Corporate Tax to 25%
d). Turnover tax reduced from 3 to 1% for SMEs and below.
e). Appropriation of 10 billion to the old and orphans through direct transfers.
f). Temporary suspension on CRB defaulting notices.
2. National Treasury to reduce VAT from 16% to 14% effective 1st April
3. Verified pending bills to be sorted within 3 weeks. Private Sector encouraged to do the same.
4. KRA expedited payment of VAT refunds within 3 weeks.
5. 1 billion health coverage kitty for supporting additional health workers.
6. Voluntary reduction in salaries – 80% for Presdient and Executive, 30% for CS, and 20% for PSs.
7. All state and public officers with pre-existing officers and aged 50 and above to take leave or work from home, excluding personnel offering essential services.
8. CBR lowered to 7.25% by CBK. And CRR to 4.25%. And performing loans payment eased.
9. Cabinet calendar reorganised to enhanced from weekly to twice weekly.
10. National Curfew announced from 7pm-5am effective this Friday
11. National police service and Coast Guard to take over Kenya Ferry services