Business highlights – Low income earners to be exempt paying from taxes

Kenyans earning less than Ksh13,500 will not pay taxes

  • Taxpayers are set to benefit from another adjustment in income tax bands and personal relief as the government moves to ease the burden on low-income earners
  • Under the proposed changes, workers will only pay taxes if they earn at least Ksh13,486 per month, with the upper band falling on incomes above Ksh46,960 per month
  • Treasury Cabinet Secretary, Henry Rotich said the increase in tax bands was informed by the need to boost the take-home pay of low-income earners

A similar review done last year took effect in January and offered workers up to Ksh600. The lowest band currently starts at Ksh11,180 per month while the upper band falls on incomes from Ksh42,782 per month. It is from the upper band that the maximum 30% tax rate is applied. That means incomes of Ksh13, 486 per month will attract taxes at 10%, and the portion beyond the first band at 15% up to Ksh23,886 per month, up from the current Ksh21,715.

The portion of incomes beyond the second band up to Ksh36,473 will be taxed at 20 per cent, with the rates rising to 25% on incomes up to Ksh46, 960 per month. Any portion of income above Ksh46,960 falls in the upper-most band that will attract the top tax rate of 30%.

READ ALSO: You don’t know what you’re doing, experts tell Kenya Revenue Authority as government body seeks new rules to crack down on tax evaders

The changes will also see personal relief go up by 10%, from the current flat rate of Ksh1,280 per month. Rotich said the measure will to a large extent increase the take-home income of a majority of low-income earners.

Kenyans over 70 to receive monthly pay from the government and free medical cover

  • Kenyans above the age of 70 will receive monthly pay from the government beginning  next January, irrespective of their income level
  • Treasury Cabinet Secretary, Henry Rotich said the annual Ksh7.4 billion payment will also see all elderly persons in the country get a National Health Insurance Fund (NHIF) cover
  • The move compliments a previous system initiated in 2012 that targeted individuals above 65 years living in extreme poverty

Rotich said in his Budget Statement yesterday, March 31, 2017, that the policy is an indication that the government cares for its senior citizens. He said old persons covered under the existing transfers for those over 65 years and those with disability will continue.

Old African man

In January 2015 at a social protection conference in Nairobi, President Uhuru Kenyatta assured attendees that the government was committed to reducing poverty across the country and that money for social protection would continue to rise every year.

READ ALSO: High medical cover costs force 26 per cent of patients to make out-of-pocket payments

The then Labour Cabinet Secretary Kazungu Kambi, whose Ministry was in charge of the payments, said there were plans to elevate it to a revolving fund to ensure it is sustainable.

Treasury commits Kh18 billion to youth empowerment programmes

  • The National Treasury has committed Ksh18.3 billion towards government-backed youth empowerment programmes aimed at addressing an unemployment crisis that has mostly affected Kenyans between the ages of 18 and 35
  • Since 2013, over 100,000 community youth have been engaged in various development programmes in the National Youth Service (NYS).
  • Over Sh25 billion has been cumulatively availed through facilities such as the Uwezo Fund, Women and Youth Enterprise Funds. Over Sh26 billion worth of tenders have been awarded under the Access to Government Procurement Opportunities (AGPO) platform

Treasury Cabinet Secretary, Henry Rotich confirmed the plans during his Budget reading on Thursday, March 30, 2017 in Nairobi.

He stated that he is allocating Ksh600 million for the Youth Enterprise Development Fund; Sh700 million for the Youth Employment and Enterprise Fund (Uwezo Fund) and Ksh800 million for the Women Enterprise Fund.

READ ALSO: You must have guarantors to access loans, Fund tells youth

He added that ongoing Youth Training and Internship Programmes will enhance the employability of Kenyan youth and increase income opportunities. The programmes target a total of 70,000 youth, aged between 16 and 29 years, who are unemployed with up to Form 4 level education, and will avail training and work experience to them in a real workplace environment.


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