Home ECONOMY Parliament amends law to protect Kenyans,firms from COVID19 pandemic

Parliament amends law to protect Kenyans,firms from COVID19 pandemic

by biasharadigest

Parliament has approved amendments to the law to enable Kenyans and firms to cope with the effects of the COVID19 pandemic. This is after lengthy deliberations which went on into the night.

Approval of the Tax Bill, 2020, paves the way for proposals contained in President Uhuru Kenyatta’s fiscal plan to fight COVID19, to kick in. This is as soon as Kenyatta signs the Bill into law and it is subsequently published in the Kenya Gazette.

On this list of beneficiaries are individuals earning less than KSh 24,000 per month, who will now be excluded from the income tax bracket.

To shield firms from COVID19 impact, the Bill lowered the Corporation Tax rate from 35 percent to 25 percent. It is expected that this reduction in the tax burden will provide an incentive for firms to retain employees.

A number of firms, especially those in the flower business, aviation as well as hotel and entertainment business have been laying off workers as each struggles to remain afloat amid shutdowns and disruptions associated with COVID19 pandemic.

Provisions relating to presumptive tax have been amended, increasing the threshold for turnover tax from KSh 500,000 to KSh 1 million. Small scale traders have been excluded from this threshold. The turnover tax rate has been reduced from 3 percent to 1 percent.

The Bill has also amended provisions of the Income Tax dealing with rates of taxation and personal relief. Personal relief has been increased from KSh 16,896 to KSh 28,800 while individual rates of tax have been reduced in accordance with corresponding amounts of income, with the effect of reducing the top tax rate to 25 percent.

The House spared the public from increased taxation which would have increased the price of basic food items. They amended the VAT Act to retain some of the essential items such as milk and milk products and bread at zero rate.

Parliament amended the tax law by removing VAT on inputs used in the manufacture of pesticides, waste residues, and by-products used in animal feeds and fertilizer.

The Parliamentarians also made several changes to the law to support the use of clean energy.

Personal protective equipment including face masks are now exempt from Value Added Tax. The change will lower the cost of face masks, still considered too expensive for most low-income earners. Figures indicate that surgical face masks sell at between KSh 80 and KSh 100 each.

The law has also been amended to exempt entry fees into national parks and game reserves and services of tour operators, from tax.

Parliament rejects proposal to brokerage services from being charged VAT

Meanwhile, the Parliamentary Committee rejected a proposal to exempt stock brokerage services from being charged Value Added Tax(VAT).

In a memo dated 6th April, 2020, a team composed of representatives from Nairobi Securities Exchange(NSE), Kenya Association of Stockbrokers and Investment Banks, fund managers, and Association of Collective Investment Schemes(ACIS), warned that levying VAT on stock brokerage services was detrimental.

The team said tax status on stock brokerage services should be maintained at exempt because any amendments will reduce investment in Government Securities and Shares, affecting liquidity at the bourse.

But the Parliamentary Committee rejected the proposal to exempt stockbrokers from paying VAT, arguing that the sector had come of age and hence continued exemption was denying Government tax revenue.

The Committee, however, agreed with a proposal from players in the Capital Market, to exempt income tax on interest income accruing from all listed bonds, notes, or other similar securities used to raise funds for infrastructure and other social services. Provided that such bonds, notes, or securities shall have a maturity of at least 3 years.

RELATED:Uhuru’s Fiscal Plan Needs Parliamentary Approval

Related Posts

Leave a Comment