New Taxes in Kenya Effective January 2021

8 months ago

The following changes with respect to Employment Income Tax, Corporation Tax, Value Added Tax are now effective.

Employment Income Tax

The following monthly PAYE rates are applicable effective 1st January 2021.

The first 24,000                            10%

The next 8,333                             25%

All income above 32,333              30%

Personal Relief Kshs 2,400 per month or Kshs 28,800 annually.

Corporation Tax

The Corporation Tax rate is 30% effective 1st January 2021.

Value Added Tax

The Value Added Tax Rate has been reinstated to 16% effective 1st January 2021.

Minimum Tax

Minimum Tax has been introduced at the rate of 1% of gross turnover effective 1st January 2021. The Instalment Tax is still applicable and payable by persons whose Instalment Tax payable is higher than the minimum tax. Minimum tax is applicable where a company’s Installment Tax liability is lower than 1% of the company’s gross turnover. The tax shall be payable quarterly by the 20th day of the 4th, 6th, 9th, and 12th month.

Minimum Tax is applicable to all persons except:

  • Where income is exempt from tax under the Income Tax Act
  • Employment Income
  • Income subject to Residential Rental Income Tax
  • Income subject to Turnover Tax
  • Income subject to Capital Gains Tax
  • Income of extractives sector
  • Persons engaged in insurance business
  • Persons engaged in business whose retail price is controlled by government

     

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