Kenya Revenue Authority informs the public on changes of tax rates introduced through the Tax Laws (Amendment) No. 2 Act of 2020 which was published on 24th December, 2020 with respect to employment income, Corporation Tax, and Legal Notice No. 206 of 2020 on Value Added Tax. The new tax rates replace those introduced in April 2020.

Individual Income Tax Rates

The following tax rates shall apply to individual income with effect from 1st January, 2021. The first monthly PAYE return under the new rate shall be due by 9th February, 2021.

Individual Income Tax Bands and applicable rates

Tax Band 

Rate of Tax

On the First KShs 24,000 per month or KShs 288,000 per annum


On the next KShs 8,333 per month or KShs 100,000 per annum


On all income amounts in excess of KShs 32,333 per month or KShs 388,000 per annum



The applicable monthly personal relief is KShs 2,400 per month or KShs 28,800 annually.

Pension Tax Bands

Pension Bands

Annual Tax Rates

Any amount in excess of tax free amounts:

On first KShs 400,000


On next KShs 400,000


On next KShs 400,000


On next KShs 400,000


 On any amount in excess of KShs 1,600,000


For pension income withdrawn before expiry of 15 years of pensionable service, the new individual tax bands and rates are applicable on any amount withdrawn in excess of tax-free amount.

 Corporation Tax

The rate of Corporation Tax is 30% of taxable income with effect from 1st January, 2021.

Value Added Tax

The rate of Value Added Tax is 16% with effect from 1st January, 2021. The first return under the new rate is due by 20th February, 2021.

Minimum Tax

The rate of Minimum Tax is 1% of the gross turnover effective 1st January, 2021. The tax shall be payable by the 20th day of the 4th, 6th, 9th and 12th month of the accounting period. However, the Tax Laws (Amendment) No.2 Act, 2020, introduced the following additional exemptions from Minimum Tax:

Persons engaged in business whose retail price is controlled by government

Persons engaged in insurance business.