Kenya’s parliament has approved the National Treasury’s decision to revert taxes to Pre- Covid levels in January 2021 to manage the growing revenue deficit, cutting short the relief that Kenyans have been enjoying since President Uhuru Kenyatta made the order.
The government in March temporarily reduced taxes aimed at offering a reprieve for businesses and consumers who had been adversely affected by the pandemic. According to the President, the move was to cushion Kenyans against the effects of Covid-19.
In this case, income tax was reduced by 5.00 percent to 25.00 percent while VAT was cut by 2.00 percent to 14.00 percent. With the approval, VAT now goes back to 16 percent and income tax back to 25 percent.
“Pursuant of provisions of sections 6 and 67 of the Value Added Tax Act 0f 2013 approves the Value Added Tax Amendment of the rate of tax 2020, will as many of that opinion say eye and will as many of contrary opinion say nay, the eyes have it,” Speaker of the National Assembly said.
However, the Members of Parliament voted to ensure Kenyans earning less than 24,000 shillings will still be granted 100percent tax relief. This means Kenyans earning 24,000 shillings and below will still enjoy tax waivers as directed by Uhuru Kenyatta.
According to the most recent government publication of the ‘Statement of Actual Revenues and Net Exchequer Issues’, 101.35 billion shillings in tax revenue was collected in the month of November, which is about 22.00percent lower than in a comparable period a year before.