The National Treasury is proposing an amendment to the Employment Act of 2007 to provide for a 35 percent income tax on all monthly salaries above 500,000 shillings and above. Well, the directive is mostly going to affect wealthy Kenyans, mostly CEOs, but is it worth it?
Currently, Pay As You Earn (PAYE) is calculated at 10 percent for those earning 0 to 24,000 shillings, 25 percent on the next 8,333 shillings, and 30 percent on the remaining amount above 32,333 shillings. The low cadet of earners will still face the pain.
Given that the government “enjoys the majority in The House”, chances are that the proposed Bill will pass and the “wealthy Kenyans” are about to feel the pinch. For those earning less, nothing to take home either, for nothing has been reduced.
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In what might seem like one of the most retrogressive Finance Bills in Kenya, the National Treasury is proposing a 3.0 percent deduction of one’s basic salary towards the National Housing Development Fund matched by another 3.0 percent from the employer.
Every Kenyan wants to own a house. Yes. But nobody trusts the government. So, the government wants to take 3 percent of your income and send it towards a “Housing Fund.” Who will own the houses? How will you benefit as a contributor?
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At the same time, through the amendment of the Income Tax Act, the National Treasury is proposing that the turnover tax be revised from the present 1.0 percent to 3.0 percent. More importantly, it wants the band eligible for turnover tax changed from Kes 1M – 50M to Kes 500,000 – Kes 15M.
Interestingly, there’s a proposal to have anyone advancing a tax dispute to the Tax Appeals Tribunal deposit 20.0 percent of the disputed amount, or any security equivalent to the same amount, with the Commissioner.