President Uhuru announces economic stimulus to caution the economy as Covid-19 cases increase

President Uhuru announces economic stimulus to caution the economy as Covid-19 cases increase

The President has today announced a list of mitigations his government will introduce to caution the impact of the Coronavirus on businesses and individuals. The President also announced three more cases of Covid-19 taking the toll to 28, as one patient fully recovers from the disease.

These are the list of measures the Government is taking;

  • 100 percent tax relief for persons earning a gross monthly income of up to Sh24,000;
  • Reduction of the income tax rate (Pay-As-You-Earn) and resident income tax (corporation tax) from 30 percent to 25 percent;
  • Reduction of the turnover tax rate from the current three percent to one percent for all micro, small and medium enterprises (MSMEs);
  • Appropriation of an additional Sh10 billion to the elderly, orphans and other vulnerable members of the society through cash-transfers by the Ministry of Labour and Social Protection, to cushion them from the adverse economic effects of the Covid-19 pandemic.
  • Temporary suspension of the listing with credit reference bureaus (CRBs) of any person, MSMEs and corporate entities whose loan account fall overdue or is in arrears, effective 1st April 2020.
  • Reduction of the value-added tax (VAT) from 16 per cent to 14 per cent effective 1st April 2020.
  • Ministries and Departments to pay at least Sh13 billion of the verified pending bills, within three weeks from the date hereof.  Similarly, and to improve liquidity in the economy and ensure businesses remain afloat by enhancing their cash flows, the private sector is also encouraged to clear all outstanding payments among themselves; within three weeks from the date hereof.
  • Kenya Revenue Authority to expedite the payment of all verified VAT refund claims amounting to Sh10 billion within three weeks; or in the alternative, allow for offsetting of Withholding VAT, in order to improve cash flows for businesses.
  • Sh1 billion from the Universal Health Coverage kitty, be immediately appropriated strictly towards the recruitment of additional health workers to support in the management of the spread of Covid-19. Ministry of Health, the County Governments, and the Public Service Commission ordered to expedite the recruitment process.
  • The President and his deputy William Ruto to take an 80 percent salary cut, Cabinet Secretaries and  Chief Administrative Secretaries (CSAs) 30 percent, and Principal Secretaries 20 percent.
  • All-State and public officers with pre-existing medical conditions and/or aged 58 years and above, serving in Job Group S and below or their equivalents, take leave or forthwith work from home, excluding personnel in the security sector and other essential services as outlined in the circular issued to the Public Service on 16th March 2020.