The Tax Laws (Amendment) Act, 2020 was assented to on 25 th April 2020. All the changes below become effective on 25 th April 2020. For ease of reference, additional changes in the Act, which were not proposed in the Bill have been bolded for ease of reference.
In the High Court ruling delivered on 19 th September 2018 in the case of Okiya Omtatah vs CS National Treasury, Commissioner General KRA, National Assembly and the Attorney General, it was held that tax measures cannot be implemented before a Tax Bill becomes an Act (after going through the legislative process as laid down in the Constitution and the assent by the President). The ruling further provided that the Provisional Collection of Taxes and Duties Act No. 44 of 1959 was unconstitutional, and therefore invalid, null and void. This ruling therefore makes the effective date of all tax measure the later of the date that an Act relating to taxes was assented to (25 th April 2020 in this case) or the effective date as provided in that Act. Our dedicated tax team is at hand to assist you with any implementation challenges.
The definition of qualifying interest has been amended to make any interest earned by a resident individual that is subject to 15% withholding tax, to be final tax. Previously, only interest earned from a licenced bank, financial institution or building society, Central Bank of Kenya and on a bond approved by the CS Finance that was subject to 15% withholding tax was treated as final tax, and any other interest that was not specifically exempt was subject to 30% tax. This change will make it attractive for individuals to invest in other instruments like commercial paper or personal loans.
Individual Tax and Tax on Wife’s Employment, Professional and Self-Employment Income – KShs
Rate - %
Cumulative Tax - KShs PM. Less Relief
First 288,000 pa. (24,000 pm.)