Posted April 24, 2020 6:10 am by

Workers’ April salaries are likely to be delayed as employers juggle with the options of complying with President Uhuru Kenyatta’s proposed changes to the pay-as-you-earn (PAYE) regulations which were before Parliament this week.

Parliament on Wednesday passed the Tax Laws (Amendment) Bill 2020, which will see those earning below Sh24,000 exempted from tax as part of efforts to cushion workers from the knocks of the Covid-19 pandemic and the resultant restrictions on movement and economic activities. The Bill will only become law once it is signed by the President.

During the debate, MPs inserted new clauses while rejecting others — raising the possibility of further delays in assenting to the omnibus Bill should the President opt to disagree with the raft of changes introduced by the legislators.

The National Assembly granted the President his wish of reducing income tax, but also rejected some revenue-raising proposals such as tax on food and agricultural inputs.

MPs stopped the Treasury from imposing taxes on bread, cooking gas, milk, fishing nets, medical products, fertiliser, mosquito nets and agricultural pest control products as well as animal products.
Parliamentarians also inserted a new clause in the Bill that bars employers from sacking workers or forcing them to take pay cuts during the current or future pandemics.

With the uncertainty about Mr Kenyatta’s next action on the Bill and the time required to process it for signing, workers in both public and private sectors are now staring at delayed salaries as many employers opt to delay processing this month’s salaries in the hope of benefiting from the tax cuts and also passing on the reliefs in the reduced PAYE to their workers.

The public sector’s Integrated Payroll and Personnel Database (IPPD) has for instance been locked and processing of April salaries put on hold in anticipation that the Bill will be passed into law early enough.

Workers under the Parliamentary Service Commission, Teachers Service Commission and the disciplined forces, whose salaries normally hit bank accounts before the 20th of every month, have been told to expect delays, according to a communication shared by the core team managing the IPPD system.

“Our IPPD systems countrywide are locked. This is to advise all of you to prepare for delay in salary processing,” a notice seen by the Business Daily reads in part.

Nikhil Hira, a director at Bowmans (Coulson Harney LLP) law firm, reckons that including so many new proposals in one Bill would likely to delay its passage Read More…