News

Coronavirus: Lawyers propose measures to save businesses, economy

Summary

  • Lawyers want Treasury to waive PAYE for low-income individuals and lower corporation tax.
  • They also want lower taxes on donations to Kenya Red Cross, county governments or any other institution responsible for the management of national disasters to alleviate the effect of Covid-19.

The Law Society of Kenya (LSK) has proposed a raft of measures that it wants implemented by Treasury to mitigate against the effects of the Covid-19 on the economy.

The World Health Organisation (WHO) has categorised the severe acute respiratory syndrome Coronavirus 2 (Covid-19) as a pandemic and the Kenyan government has since announced bold measures to contain the spread in the country.

The measures LSK wants considered by government are intended to benefit business entities and individuals who have experienced the adverse effects of Covid-19.

LSK wants the state to provide incentives to manufacturers of relevant essential supplies such as sanitisers, toiletries, masks, gloves, vitamins and specialised medical equipment, by temporarily lowering the applicable corporation tax at least for the current year of income.

They also want lower taxes on donations to Kenya Red Cross, county governments or any other institution responsible for the management of national disasters to alleviate the effect of Covid-19.

The lawyers' umbrella body is equally concerned that individuals who have a relatively lower income will be hit hardest by the economic turmoil caused by the effects of the crisis.

“To cushion these employees from the negative economic impact of the pandemic, we propose a temporary waiver on PAYE on low income employees earning Sh23,885 and below per month until Covid-19 is brought under control,” outgoing LSK president Allen Gichuhi.

They also want the mortgage relief increased from the current Sh300,000 per annum to Sh500,000 to provide relief to borrowers whose liquidity is likely to be affected during the current year of income.

In order to accommodate the potential challenges by taxpayers to make payments within the statutory time limits, LSK proposes a 90-day extension period for the payment of the taxes.

“This is bearing in mind that April is the first quarter of the financial year for most taxpayers and the due date for the payment of the first instalment corporate tax and the balance of the corporate tax liability for the previous financial year,” Mr Gichuhi.

With the suspension of travel for all persons coming into Kenya from any country that has reported Covid-19 cases and the ban of all conferences, meetings and public gatherings, it is imperative that hotels and restaurants will scale down their operations or close until Covid-19 is brought under control.

LSK wants the government to grant tax rebates and waivers to operators in the hospitality industry, to cushion them against the negative impact of the crisis.