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The Tax Law (Amendment) Act 2020
Relevant Act Current Provision Amended Provision Rationale
1. Income Tax Act CAP
470

Under the Income Tax Act
CAP 470 the Cooperate Tax on
companies is at 30%

The Amendment has lowered
the Cooperate Tax to 25%.

The rational for this reduction is
that it will enhance investments
for companies.

2. Finance Act 2019 The Finance Act 2019
introduced Turnover Tax of
3%. It was to be applied on any
entity earning above Kenya Sh.
500,000 and below Kenya Sh.
5,000,000.

The Amendment Act has
lowered the Turnover Tax to
1%. The government also
increased the threshold for
which the tax will apply from
companies with a turnover of
Kenya Sh. 500,000 shilling to a
turnover of Kenya
Sh.1,000,000.

The rational for this is that
Small and Medium sized
companies will have extra cash
flow and will enhance
investments for companies.

3. Income Tax Act CAP
470

Pay as You Earn tax relief
Under the third schedule of the
Income Tax Act CAP470
employees earning sixteen
thousand eight and ninety-six
and ninety-six (16,896) per
month are entitled to a tax
relief.

Pay as you Earn tax relief
The Amendment Act as
amended the tax relief and
increased the amount to twenty-
eight thousand eight hundred.
(28,800) per month.

This will increase disposable
income for individuals in order
to enhance consumption

Under the third schedule of the
Income Tax Act CAP 470 the
Pay as You Earn tax brackets
were as follows:*

Under the Amendment Act the
new Pay as You Earn tax
brackets are as follows:*

This will increase disposable
income for individuals in order

Post Author: kangwanaco