KRA rules out corona tax cuts before bill becomes law

Workers will not get tax cuts until proposed amendments become law, Kenya Revenue Authority (KRA) has said, denting hopes for many struggling Kenyans in the wake of coronavirus pandemic.

KRA said on Wednesday that President Uhuru Kenyatta’s proposal to exempt workers earning Sh24,000 and below from taxation will not set in until the bill containing the proposal is passed into law.

“Please note the PAYE rate is now a bill that is yet to be assented to. Use the old rates until such a time when Parliament will pass the bill into law,” KRA said in tweet.

This was in an answer to a Twitter user who was seeking clarification on whether to use the rates that were proposed by President Kenyatta in preparing salaries for April. 

In the proposed tax cuts, which Parliament is debating, workers earning less than Sh24, 000 will be excluded from paying taxes while the minimum income tax rate, known as Pay-As-You-Earn (PAYE) has been reduced from 30 to 25 percent.

Corporation tax will be reduced to 25 from 30 percent under plans scheduled to come into force this month once approved by Parliament.

Traders operating small and mid-sized businesses will paying one percent turnover tax on their sales, down from the three percent rate introduced in January.