The National Treasury has said the tax rates that were there before the Covid-19 pandemic and subsequent introduction of containment measures will resume on January 1st 2021. The corporate tax rate will revert to 30% from the current 25%, the individual income tax rate will revert to 30% from the current 25% and the value added tax rate will be 16% from the current 14%. Those earning monthly incomes of Kshs 24,000 and below will however still be cushioned by the government, as the 100% tax relief will be retained.
Treasury CS Ukur Yattani on Friday said it has become necessary to ease back to the pre-Covid-19 tax rates owing to the fact that some of the containment measures have been eased and there is a return to normalcy. He said the government will have as at 31st December 2020 forgone tax revenues totaling Kshs 65 billion over seven months, “This 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,” he said.
He noted that the temporary tax relief measures were important to support Kenyan businesses and provide relief to the most vulnerable in society. He further stated that the government will continue to roll out interventions to cushion Kenyans under the Kshs 58.1 billion economic stimulus programme.
