The cabinet secretary for The national treasury and planning Ukur Yatani stated that the pre-covid taxes shall be back effective January 2021 in a press statement shared on the 4th of December 2020. The changes are to enable the implementation of the government budget . He noted that these are not new tax rates but rather the reinstatement of the prevailing tax rates that had been reviewed to cushion Kenyans from the effects of the Covid-19 pandemic. This was part of the presidential directives issued in April 2020.
He stated that the government will have foregone tax revenue totaling to KES 65 billion as at the end of December 2020. This has affected the implementation of the government’s priority programs under the big 4 agenda and the recovery of the economy in general.
On the bright side, the government will continue to cushion the low income earners by retaining 100% tax exemption/ relief for those earning monthly income of KES 24,000 and Below. Alongside these measures , the government will continue to roll out interventions under the KES 58.1 Billion economic stimulus programme (ESP), such as kazi mtaani and others to cushion vulnerable citizens and also enhance the liquidity of business.
The reinstated taxes shall be as follows:
Corporate tax from 25% back to 30%
PAYE from 25% back to 30%
VAT from 14% back to 16%