TAX LAWS (AMENDMENT) BILL, 2020
07 April 2020
TAX LAWS (AMENDMENT) BILL, 2020 BDO ANALYSIS
Tax Laws (Amendment) Bill, 2020 was published on 31st March 2020.It outlines proposed changes in our tax law.
Key among these is the proposed reduction in PAYE, with the upper income band being taxed at 25% instead of the current 30%. Alongside, the increment of personal relief from and reduction of tax on pension withdrawals, this measure is aimed at cushioning Kenyans from projected negative impact of COVID-19. BDO welcomes this.
The President’s recommendation for reduction of the resident corporate tax rate to 25% from 30% is missing in the Bill but is expected to be factored by the National Assembly. Again, such proposal would increase Kenyans competitiveness and increase return on investments.
A clean up of the investment allowances schedule is welcome. However, the proposed reduction in investment deduction from 100% in the first year to a staggered 50% in the first year and 25% in the subsequent is a cut-back in the investment incentives.
While VAT rate is proposed to be reduced to 14% from 16%, many exempt items are proposed to be taxed at the standard rate.
All the changes proposed by the Bill will become effective upon its enactment. This is a comprehensive analysis of what to expect, should the proposal sail through.