Global Payment and Compliance
You might have heard the craze with the New PAYE rates 2020 in Kenya.
You might have heard the craze with the New PAYE rates 2020 in Kenya. In fact, it was a trending topic on Twitter on the 22nd April 2020 in Kenyan trends. Following the outbreak of COVID- 19 around the world and the virus being declared a global pandemic, there has been a significant negative impact on economies around the world. To shield this, countries have been forced to come up with economic measures to contain the health crisis as well as to economically support their citizens and businesses. The Kenyan government, in particular, has instituted tax reliefs to its citizens with effect from the 1st of April 2020. This tax measure will be tabled to parliament through a bill to amend the respective tax law. Here are several tax measures as outlined by the President to cushion Kenyans against the economic effects of COVID-19;
Personal relief KES 2,400 (KES. 28,800 p.a)
Reduction of turnover rate from 3% to 1% for sole proprietors. This will affect traders whose businesses will be hit hard by the measures put in place to contain the virus i.e. traders who will be forced to close down their businesses.
Reduction of value-added standard rate tax from 16% to 14%. When the VAT rate is reduced, taxable goods and services will be more affordable and this will reduce the cost of living. The cash flow of businesses will also improve due to reduced outflow.
VAT refunds: KRA to approve and release verified VAT refund claims and allow for offsetting VAT. Payment of VAT refunds will help businesses that need cash for their survival during the impacts of COVID 19.
Standard rate reduced from 30% to 25%. The new rate will boost cash flow for businesses on payment of instalment taxes. This will help the resident’s corporate who will be in a profitable position to reduce its profitable corporate tax and increase its retained earnings for re-investment.
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