Kenya PAYE 2020 Rates

Pay-As-You-Earn (PAYE) is a method of collecting tax from individuals in gainful employment, in Kenya. Gains or Profits includes wages, casual wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, or subsistence, travelling, entertainment or other allowance received in respect of employment or services rendered.

If you are an employer, you are required to register for this obligation by initiating amendment in your KRA PIN to add it. All employees are also required to apply for a PIN too from KRA to allow the employer to remit these taxes.

As an employer you are required to deduct PAYE from your employees’ salaries and wages at the prevailing rates and remit the same to KRA on or before the 9th of the following month.

Effective 1st April 2020, as way of the government mitigating Covid-19 implications on employees, the rates for PAYE were reduced as below

 

Monthly income (Kshs) Tax rate Cumulative tax per month
1 – 24000 10% On the first Kshs. 24,000.00
24,001– 40,667 15% On the next Kshs.  16,666.00
40,668– 57,334 20% On the next Kshs.  16,666.00
57,335 25% On all income above Kshs. 57,335
     
Monthly tax relief   Kshs. 2,400

 

Salary payment amounting to Ksh. 24,000 and below will yield no tax to pay. Note however these rates were put in place to mitigate the pandemic effects and may be reversed to old rates once the adverse effects have stabilized.

Kreston KM, Certified Public Accountants, is an accounting firm registered and operating under the Accountants Act Chap 15 of 2008 – laws of Kenya. The firm, a member of Kreston International, a global network of independent accounting firms, provides professional services that include, audit, tax and consulting.

For more information, please contact us on: +254 720 018525 or info@krestonkm.com or visit our website: www.krestonkm.com

 

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