Among the statutory interventions by President Uhuru to cushion Kenyans from the effects of COVID-19 on their finances. President Uhuru announced a 100 per cent tax relief to those earning less than 24,000 and 5% cut for those earning above that. The National Assembly has finally adopted 2020, Tax Laws (Amendment) Bill in line with the above Presidential directives. The Bill was subject to amendments by the House National Planning and Finance Committee and made key amendments to the Income Tax Act.
The Bill amended the third schedule to the income tax on personal relief and rates of taxation, which was given a nod by the parliamentarians. Personal relief is now proposed to increase from 16896 to 28,800. Individual rates of taxes have been reduced in accordance with corresponding amounts with the effect of reducing the top tax rate to 25 per cent. The threshold for turnover taxes has been increased from Ksh 500,000 to 1,000,000 which implies that small scale traders will be exempted from the Turn over Tax which will cost 1 per cent from 3 per cent.
They have also okayed a tax cut to corporates from 30% to 25% so they can refrain from the decision of firing employees which is prohibited in the new law. The law now prohibits employers from terminating the contract of service of an employee, dismissal of an employee or coercion of an employee to take salary pay cuts. Instead, the law now requires employees who are unable to meet their obligations to arrange with their employees to take an unpaid leave of absence instead of sacking them.