On 11 June 2020, the Cabinet Secretary for the National Treasury and Planning, Mr. Ukur Yatani Kanacho delivered the 2020/21 Budget to the National Assembly.
The summary of proposed tax measures are following:
Income Tax Measures
- Raised the upper ceiling for the simplified monthly rental income tax regime from Ksh10 million to Ksh 15 million to allow more landlords to join the simple regime;
- Introduction of Digital Service Tax at 1.5% of gross transactions value to provide a framework for taxing income earned through digital platforms; and
- Introduction of Minimum Tax at 1% of gross turnover and shall be paid through a quarterly instalment tax system by the 20th of the fourth, sixth, ninth and twelfth months.
Customs Measures to support the Manufacturing Sector
- Retained the import duty at 35% on iron and steel products and 25% on leather and footwear products;
- Inputs used in the textile sector, assembly of mobile phones and manufacture of baby diapers to be imported duty free under the EAC Duty Remission Scheme;
- Supplies for diagnosis, prevention, treatment, and management of Covid-19 Pandemic exempted from import duty;
- Raw materials and inputs for manufacture of masks, sanitizers, ventilators and personal protective equipment including coveralls and face shields to be imported duty free under the EAC Duty Remission Scheme.
Value Added Tax Measures
- Exempted corn or maize seeds from VAT to cushion farmers from the high cost of maize seeds for sowing;
- Exempted ambulance services from VAT to further cushion Kenyans from the high cost of seeking medical services.
Fees and Levies
- Exempted currency notes and coins imported by the Central Bank of Kenya from payment of Railway Development Levy;
- Import Declaration Fees rate harmonized at 1.5 percent for all the manufacturers including those under EAC Duty Remission Scheme.
