[Kenya] World Bank proposes PAYE restructuring

In Kenya, lower-earning workers could end up paying lower PAYE taxes, if the government adopts proposals from the World Bank, Kenyans.co.ke reports.

The World Bank has proposed changes to Kenya's Personal Income Tax (PIT), intended to increase tax progressivity while keeping revenue neutral. 

It is reportedly pushing for an increase to tax bands, stating that the current PIT model disproportionately affects low-wage earners and does not rise significantly for higher earners when accounting for contributions.

Under the new proposal, for Kenyans earning up to Ksh288,000 per annum (Ksh24,000 per month), PIT was set at 10 per cent. This was in line with the previous model and will therefore not change. 

The next band covering Ksh288,000 per annum (Ksh24,000 per month) to Ksh388,000 per annum (Ksh32,333 per month) has been revised downward to 15 per cent. The PIT was previously at 25 per cent. The changes would see workers in this band paying a lower income tax.

The next tax band covering workers earning a salary of Ksh388,000 per annum (Ksh32,333 per month) to Ksh6 million per annum (Ksh500,000 per month) has been split into two under the proposed changes.

The World Bank has proposed a 25 per cent PAYE on individuals earning from Ksh388,000 per annum (Ksh32,333) to Ksh2 million per annum (Ksh166,663 per month). Those earning from Ksh2 million per annum (Ksh166,663 per month) to Ksh6 million per annum (Ksh500,000 per month) would pay a PIT of 32.5 per cent.

This represents a shift from the current system, where Kenyans earning Ksh388,000 per annum (Ksh166,663 per month) to Ksh6 million per annum (Ksh500,000 per month) pay a PIT of 30 per cent.

Individuals earning from Ksh6 million per annum (Ksh500,000 per month) to Ksh9.6 million per annum (Ksh800,000 per month) would reportedly pay a tax of 35 per cent on their income, the proposal states. 

Kenyans who fall within this income band would pay a tax of 32.5 per cent, representing an increase in PIT and in keeping with the World Bank’s goal of imposing higher taxes on high-income earners to ease the burden on lower-income earners.

The World Bank has also proposed a 38 per cent income tax on Kenyans earning Ksh9.6 million per annum (Ksh800,000 per month). This is an increase from the 35 per cent currently imposed.

Source: Kenyans.co.ke

(LInk via original reporting)

In Kenya, lower-earning workers could end up paying lower PAYE taxes, if the government adopts proposals from the World Bank, Kenyans.co.ke reports.

The World Bank has proposed changes to Kenya's Personal Income Tax (PIT), intended to increase tax progressivity while keeping revenue neutral. 

It is reportedly pushing for an increase to tax bands, stating that the current PIT model disproportionately affects low-wage earners and does not rise significantly for higher earners when accounting for contributions.

Under the new proposal, for Kenyans earning up to Ksh288,000 per annum (Ksh24,000 per month), PIT was set at 10 per cent. This was in line with the previous model and will therefore not change. 

The next band covering Ksh288,000 per annum (Ksh24,000 per month) to Ksh388,000 per annum (Ksh32,333 per month) has been revised downward to 15 per cent. The PIT was previously at 25 per cent. The changes would see workers in this band paying a lower income tax.

The next tax band covering workers earning a salary of Ksh388,000 per annum (Ksh32,333 per month) to Ksh6 million per annum (Ksh500,000 per month) has been split into two under the proposed changes.

The World Bank has proposed a 25 per cent PAYE on individuals earning from Ksh388,000 per annum (Ksh32,333) to Ksh2 million per annum (Ksh166,663 per month). Those earning from Ksh2 million per annum (Ksh166,663 per month) to Ksh6 million per annum (Ksh500,000 per month) would pay a PIT of 32.5 per cent.

This represents a shift from the current system, where Kenyans earning Ksh388,000 per annum (Ksh166,663 per month) to Ksh6 million per annum (Ksh500,000 per month) pay a PIT of 30 per cent.

Individuals earning from Ksh6 million per annum (Ksh500,000 per month) to Ksh9.6 million per annum (Ksh800,000 per month) would reportedly pay a tax of 35 per cent on their income, the proposal states. 

Kenyans who fall within this income band would pay a tax of 32.5 per cent, representing an increase in PIT and in keeping with the World Bank’s goal of imposing higher taxes on high-income earners to ease the burden on lower-income earners.

The World Bank has also proposed a 38 per cent income tax on Kenyans earning Ksh9.6 million per annum (Ksh800,000 per month). This is an increase from the 35 per cent currently imposed.

Source: Kenyans.co.ke

(LInk via original reporting)