Cabinet orders all employers to calculate employee tax reliefs and exemptions on PAYE to relieve KRA
The Cabinet has given its nod to the Finance Bill 2025, with key changes approved that will change how employers calculate Pay As You Earn (PAYE) taxes for employees.
The Cabinet has given its nod to the Finance Bill 2025, with key changes approved that will change how employers calculate Pay As You Earn (PAYE) taxes for employees.
Employers will be required to automatically apply all eligible tax reliefs and exemptions when calculating Pay As You Earn (PAYE) taxes for employees.
This is after the Cabinet took note of the current situation, where many employers omit the reliefs, forcing their employees to seek refunds from the Kenya Revenue Authority (KRA).
”Employers will also be required to automatically apply all eligible tax reliefs and exemptions when calculating Pay As You Earn (PAYE) taxes for employees,” reads part of the Cabinet dispatch.
Adding, “Currently, many employers omit these reliefs, forcing employees to seek refunds from the Kenya Revenue Authority. These reforms underpin the Bottom-Up Economic Transformation Agenda (BETA) and reinforce the government’s commitment to building a stronger, more inclusive economy.”
According to the Cabinet, the changes will be part of government efforts to minimise tax-raising measures in the preceding financial years.
Further, the Cabinet took note of a scheme where some Kenyans have in the past used the tax refund claims to siphon funds from public coffers, such as through inflated tax refund claims, hence the changes on PAYE.
This means that Kenyans will now avoid the long queues that have been witnessed in the past years at KRA offices while following up on tax refunds.
Cabinet approves opening of a Consulate General in Haiti
Government flags 58 betting websites operating without authorization [Full List]
‘State-sponsored’ Karua responds to Morara Kebaso’s remarks on oppostion leaders meeting
Al-Shabaab militants kill 5 non-local quarry workers in Mandera
Mombasa governor moves his office to hospital
Disgraced Cardinal Becciu formally withdraws from participation in conclave to elect pope
Additionally, Kenyans operating small businesses will be able to fully deduct the cost of everyday tools and equipment in the year of purchase, thereby eliminating unnecessary delays in accessing tax relief.
Meanwhile, the Finance Bill 2025 will include provisions that will streamline tax refund processes, seal legal gaps that delay revenue collection, and reduce tax disputes by amending the Income Tax Act, VAT Act, Excise Duty Act, and the Tax Procedures Act.
This could see further amendments to the Income Tax Act, VAT Act, Excise Duty Act, and the Tax Procedures Act in line with the conditions that the International Monetary Fund (IMF) and the World Bank had put as a condition for lending and other financial obligations.
On April 8, the World Bank said in an interview with Bloomberg that it would unlock further financing for Kenya on the condition that President William Ruto’s government implements wide-ranging economic reforms agreed on last year.
Some of the measures agreed upon under the programme include the rollout of an electronic procurement system (eGP), which was launched by Treasury CS John Mbadi on April 7.
Additionally, Kenya had to consolidate all government finances into a single account at the Central Bank and deal with the misuse of funds.
Win for Judges as Cabinet approves retirement benefits
Government responds to BBC ‘Blood Parliament’ documentary
Nigeria names 4 Kenyans in wanted list
IG Kanja, DCI Boss Amin forced to remain in chopper for an hour after residents chase police
Matiang’i joins Gachagua, Kalonzo, Muturi, Linturi in crucial talks
Gachagua threatens to name leaders behind Narok chaos that five people dead
Follow us
