CUSHION LOW-INCOME EARNERS

LSK asks government to exempt low-income earners from taxes

Says individuals who fall within lower bands are going to be hit the hardest by the crisis.

In Summary

• The Law Society of Kenya has asked President Uhuru Kenyatta to cushion employees from the negative economic impact of the Covid-19.

• In the letter copied to the Cabinet Secretary National Treasury, LSK said every individual is entitled to a personal relief of Sh16,896 per year under the third schedule of the ITA.

People queue at the Kenya revenue authority headquarters along haile selassie avenue in a last minute effort to beat the deadline for filing income tax return .
People queue at the Kenya revenue authority headquarters along haile selassie avenue in a last minute effort to beat the deadline for filing income tax return .
Image: FILE

The Law Society of Kenya has asked President Uhuru Kenyatta to cushion employees from the negative economic impact of the Covid-19 pandemic.

The society's President Allen Gichuhi in a 13-point letter to the president said as a result of the disease, it is evident that individuals who fall within the lower bands are going to be hit the hardest by the economic turmoil caused by the effects of the crisis.

"We propose a temporary waiver on PAYE on low-income employees earning Sh23,885 and below per month until Covid-19 is brought under control," Gichuhi said.

 
 

In the letter copied to the Cabinet Secretary National Treasury, LSK said every individual is entitled to a personal relief of Sh16,896 per year under the third schedule of the ITA.

This he said translates to Sh1,408 per month.

"To ensure that the affected individual taxpayers are able to meet their daily expenses and other unplanned expenses, we propose that personal tax relief to resident individuals be enhanced by 100 per cent for taxpayers for the current year of income," the letter read in part.

Gichuhi said, as a result, the government should zero rate taxable goods for emergency relief purposes for use in specific areas within a specific period, supplied to or imported by the government from the current exempt status.

"We propose that the importation of sanitisers, toiletries, masks, gloves and specialised medical apparel for infections diseases for use in Kenya during the pandemic period be exempted from VAT," he said.

Considering the potential challenges by taxpayers to submit these returns within the current statutory time limits, LSK said the government should extend the time limits for a period of 90 days, which should be reviewed if the crisis is not under control by that time.

The society said to enhance the fight against the spread of Covid-19, the government should incentivise manufacturers of relevant essential supplies such as sanitisers, toiletries, masks, gloves, vitamins and specialised medical equipment by temporarily lowering the applicable corporation tax at least for the current year of income.

 
 

"To provide financial relief to SMEs, we propose that the government lowers the applicable corporation tax during the current year of income," Gichuhi said.

Gichuhi said there is an urgent need to consider the implications of the above scenarios and how best to sustain the livelihoods of the shareholders and also ensure the interests of companies are not affected adversely.

"This is an unprecedented situation that invites innovative interventions either immediate or through legislative," he said.


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