Africa: Kenya – Tax Table Changes

The Kenya Tax File was released at the end of April.

 

President Uhuru Kenyatta has ordered payroll-related tax changes as part of measures announced to cushion Kenyans against the impact of the coronavirus pandemic. 

He assented to the Tax Laws (Amendment) Act, 2020 on 25 April 2020.

The following PAYE changes were approved:

 

Change in Personal Relief – Third Schedule, Head A(1)

 

Annual personal relief has increased from KSh16 896 to KSh28 800.

 

Changes in the Tax Table – Third Schedule, Head B(1)

 

 

 

Annual Taxable Income (KSh)		Tax Rate
From	To
0,00	288 000,00	10%
288 000,01	488 000,00	15%
488 000,01	688 000,00	20%
688 000,01	And above	25%

 

The following amendment is part of this release.

 

Following the change in the Kenya tax table, the tax rate for secondary employees has been updated to 25% (previously 30%).

 

The legislation does not state that "secondary employment must be taxed at 30%"; neither does the KRA in any of its official publications. Based on Kenyan tax practice, it is assumed that part-time directors and secondary employees who have primary employment elsewhere, should be taxed using the highest tax rate for individuals.

 

The effective date 25 April 2020.

PAYE is deducted upon payment of the salary and where payment is made after the effective date, the new rates should apply.

 

Important Notice:  Ensure that you are making use of monthly tax tables to avoid tax recalculations based on previous periods income and that you are in a new pay period, before any payments has been made.

 

After converting your companies to the new Software, it is advisable to do a General Recalculation in the company:  Access your Kenya Company.  From the Main Menu, click on Payroll and then select General Recalc.  When you get the message “Do you want to Recalculate the Earnings and Deductions for ALL Employees?” click on Yes.