Amendment bill

Amendment bill

Amendment bill which, among other things, lowered the Value Added Tax rate from 16 to 14 percent. The amendments include a 100 percent PAYE tax relief for employees earning less than Sh 28,0000 per month and a 5 percent tax relief for those earning above 28,000.

Similarly, the new Act has revised Corporation Tax to 25 percent while Non-Resident Tax on Dividends has been adjusted from 10 to 15 percent.

The amendments include the rise in the threshold for a turnover tax to between one million and fifty million shillings so as to exclude small-scale traders from the presumptive tax. The new law further lowers the turnover tax rate from 3 to 1 percent.

Those are some of the tax measures effected, a similar move proposed by the Pandemic bill, which is in its second reading stage in the Senate.

Looking at loans and mortgages, which forms a critical aspect for many middle and upper-middle-class people, the Pandemic Bill suggests that if a borrower is adversely affected and lacks the capacity to meet the obligations as stipulated in the contract entered with the lender prior the pandemic, then there should be a renegotiation on the repayment modalities. This proposal has however been faulted by banks that the agreement should be bound to the terms agreed by the parties under the agreement. In addition, it recommends that during a pandemic, the lender’s soul d not impose penalties on the defaulters. The Central Bank of Kenya has barred digital lenders from listing lenders in addition to removing the fees for a certificate for new lenders.

In order to protect the property of those affected by the pandemic, the bill bans the levying of execution and repossessing properties of individuals to use for the purpose of trade, business, or profession. It also prohibits termination of leases or licenses of property in connection with failure to pay rent over the pandemic period. Interestingly, this was part of the proposal under the Tax Laws (Amendment Bill but it was not adopted in the final version of the bill, now law.

Under the bill, is a proposal that tenants and landlords enter into an agreement on how a tenant, whose financial capacity has been sabotaged, shall be relieved of the payment during the pandemic period and be able to meet the obligation at the end of the pandemic. It does not relieve a party from paying rent but postpones the payment.

With the closure of business, relaxed operations in companies, and work from home advisories, many employees are likely to be affected by a pandemic like COVID 19. Therefore, the Pandemic bill proposes that an employer is barred from terminating the contract of service, dismiss an employee, or force them to take a salary cut. The proposal was also dropped in the Tax Laws amendment bill, which was signed into law by President.

Finally, the bill recommends that the National and Government should waive utility bills, rates, and license fees for a vulnerable population. That the Government should liaise with water and electricity service providers to adjust tariff rates for individuals and businesses. Also, it proposes that the devolved units may suspend fees payable on the renewal of trade licenses.

If passed to law, the bill will provide an ideal regulatory framework that will cushion Kenyans from the adverse effect of a pandemic to the economy. The initial draft by the Senate is a reasonable one but would be better with various inputs from stakeholders who will identify the gaps as well as provide clarity and further recommendation on perfecting the bill.