Thursday, December 31, 2020 – Kenyans will have to dig deeper into their pockets to support their lives in 2021 as the cost of basic commodities goes up beginning tomorrow.

This is after the Value Added Tax (VAT) relief that the Government had announced in April 2020 expires, effectively increasing VAT from 14 percent to 16 percent. 

In early December, the National Treasury announced that a majority of tax relief that was necessitated by the Covid-19 pandemic will cease to apply on January 1.

Prices of mobile airtime and electricity will go up alongside other products such as TV subscriptions and newspapers.

A 2% reduction in VAT had earned airtime users a Ksh2 reprieve on every Ksh100 airtime purchased.

Safaricom home fibre subscribers are also set to lose Ksh58 on every Ksh 2,900 subscription with the figure expected to go up in higher subscription packages.

Kenya Power customers are set to lose Ksh20 reprieve on every Ksh 1,000 power purchased after the reversal of the VAT charge.

As part of the new tax guidelines, all salaried workers earning over Ksh50,000 will be subject to 30% Pay as You Earn (PAYE) tax as the New Year sets in.

The new tax regulations were passed by Parliament and approved by President Uhuru Kenyatta.

Treasury CS Ukur Yatani justified the new tax measures explaining that the cuts were no longer sustainable after the initial eight-month run that saw the state forego Ksh65 billion in taxes.

Only Kenyans earning less than Ksh 24,000 will be exempted from PAYE after their 100 percent relief was retained.


Leave a Reply