Why Kenyans should expect slight salary reduction beginning January 2021

Good news for Kenyans who earn less than Sh24,000

Treasury CS Ukur Yattani

Treasury CS Ukur Yattani on Friday announced the end of Covid-19 relief tax rates instituted by President Uhuru Kenyatta earlier this year.

In a statement to the press, CS Yattani noted that the country will return to the pre-Covid-19 Pay As You Earn (PAYE) and Value Added Tax (VAT) tax rates.

"Given the easing of some of the containment measures and subsequent resumption of normalcy, it has, therefore, become necessary to return to the pre-Covid-19 tax rates effective 1st January, 2021.

"The Corporate Tax rate reverts to 30% from the current 25%, the Individual Income Tax rate reverts to 30% from the current 25% and the Value Added Tax rate reverts to 16% from the current 14%," the CS's statement read in part.

Employed Kenyans have only December to enjoy the slight increase to their salaries since March. January 2021 will see them receive their pre-Covid-19 remuneration or lower given that majority of the work force had to take pay cuts.

Kenyans who earn below Sh24,000

CS Yattani, however, noted that the 100% tax exemption announced for Kenyans earning below Sh24,000 will continue to be in force.

"This indeed, increased tax relief for individuals earning from Sh16,896 to Sh28,800.

"The government will continue to cushion the low-income earners, by retaining 100% tax exemption/relief for those earning monthly incomes of Sh24,000 and below," the statement noted.

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