Kenyans who continue to suffer under the half closed Kenyan economy due to the Covid-19 pandemic have a reason to smile as they will continue enjoying tax cuts contained in a stimulus package announced in April by the government to address the impact of coronavirus on the economy.
In his state address to the nation on Monday, President Uhuru Kenyatta announced the retainment of a number of measures to support small businesses and innovators including 100pc tax relief for employees earning up to Ksh24,000 per month which will now be in effect until December 31st while those earning above the new threshold will benefit from a PAYE tax reduction of 5pc.
“To continue cushioning low-income earners the National Treasury maintains the 100 per cent tax relief for persons earning a gross monthly income of up to Ksh 24,000 beyond the Sunset date of 31st December 2020. I direct that the National Treasury considers retaining the Income Tax Rate (Pay-As-You-Earn) at 25 per cent until 1st January 2021” he said.
Others measures include retaining VAT at 14pc until 1st January 2021, Resident Income Tax (Corporation Tax) at 25pc, and reduction of the turnover tax rate from 3pc to 1 pc for all Micro, Small, and Medium-sized Enterprises (MSMEs)
The National Treasury was also been directed to expedite the roll-out of the credit guarantee scheme for MSMEs in partnership with participating banks and development partners.
The credit guarantee scheme as approved by Cabinet is a risk-sharing partnership between the Government and banks, which will afford enterprises access to credit by an additional 100 billion shillings.
The President at the same time hailed innovators who have emerged during the pandemic and promised to support them as part of the resilience-building strategy.
“Against all odds, some of our entrepreneurs have re-imagined the subsisting pandemic and created a new business reality that disorganizes the existing order at play. This is a new business model driven by innovators and makers of things; people who did not see the danger in the COVID crisis, but saw opportunity instead. Businesses that experienced shock from COVID, but bounced back better” he said.
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