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Economic Update

Return to pre-Covid-19 VAT and Income Tax rates

On 4th December 2020, the National Treasury announced the return to pre-Covid-19 Value Added Tax (VAT) and Income tax rates effective 1st January 2021, in light of the easing of some containment measures and subsequent resumption to normalcy. After the first confirmed case of Covid-19 was reported on March 14th 2020, temporary tax reprieves were introduced as part of containment measures in response to the pandemic to provide a temporary cushion for business and people. In the preceding 7 months, the government disclosed it had foregone KES 65 billion in tax revenues as at 31st December 2020, and the gap arising will affect the implementation of programmes and the recovery of the economy in general.

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