INSIDE THE GOVERNMENT’S PLAN TO LOWER TAX RATES
INSIDE THE GOVERNMENT’S PLAN TO LOWER TAX RATES
The National Treasury has recently hinted at significant changes to the country’s tax regime, with possible reductions in the income tax rate from 30% to 25%, a decrease in Value Added Tax (VAT) from 16% to 14%, and potential decrease in Pay-As-You-Earn (PAYE). These changes could bring relief to taxpayers and businesses alike. While the government is keen on the medium-term goals, the changes in the tax rates raise questions regarding the long-term implications for government revenue and the broader economy. The reductions will potentially make Kenya more competitive for investors, regionally. In the East Africa Community, for example, Kenya currently has its standard VAT rate at 16% while the other countries charge VAT at 18%. With regard to Income Tax, all the EAC countries charge Resident Corporate Tax at the rate of 30%.
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