Kenyan workers have started to receive reduced salaries of up to 6% as payroll accountants start effecting new tax bands on income.
The effect means that people who are employed should expert smaller paysilps from this week as companies pay their January salaries. This will result in big gap from what they have been receiving considering most companies are unlikely to raise employers salaries.
According to a report that appeared in the Daily Nation on Friday, a maximum 30 per cent tax rate has been added to any salary amounts that are above Sh. 32,333.
“The new law comes with just three tax bands from the initial five. Now, it will just be 10 per cent for the first Sh. 24,000, then 25 percent for the next Sh. 8,333 and thereafter any remaining amounts above Sh. 32,334 will now be taxed at the maximum 30 percent,” the report stated.
Employed individuals on a higher salaries will shoulder the biggest burden as the government strives to get more money.
During the revision of taxes in December, Parliament introduced last-minute changes to the tax laws that reduced the number of tax bands to just three and slapped the maximum 30 per cent tax rate to any amounts above Sh32,333, down from Sh57,334.
The new law comes with just three tax bands from the initial five.
Now, it will just be 10 per cent for the first Sh24,000, then 25 percent for the next Sh8,333 and thereafter any remaining amounts above Sh32,334 will now be taxed at the maximum 30 percent.
In case you are wondering when was the new law, approved, well President Kenyatta signed the changes into law on the last week of the year.
To ease the burden on Kenyans, the government has retained 100 percent tax relief for workers earning less than Sh24,000, which has helped cushion the low-income earners.
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The tax relief is not permanent and, while it is not clear when, it may be taken away by the National Treasury anytime.
This means that an employee who earns Sh. 25,000 will continue earning a net of Sh. 24,750 while an employee earning Sh. 50, 000 a month will take home Sh. 42,617, a small reduction from the Sh. 45,633 in December.
Those earning Sh. 100,000 will take home Sh. 77,617 compared to Sh. 82,200 in December whereas employees earning Sh. 200,000 will have the taxman take away about Sh. 52,000 in taxes and will be left with Sh. 147,617 in net salary.
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