March 25, 2020 / 3:55 PM / 9 days ago

REFILE-UPDATE 2-Kenya announces tax cuts and curfew in battle with coronavirus

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* Kenya has confirmed 28 COVID-19 cases

* President announces new measures against coronavirus

* Moves include cuts in VAT and corporation tax

* Curfew will be imposed at night

*

By Omar Mohammed and George Obulutsa

NAIROBI, March 25 (Reuters) - Kenya announced tax cuts on Wednesday to protect East Africa’s richest economy against the coronavirus and said it was imposing a curfew at night to curb its spread.

In a televised address, President Uhuru Kenyatta said the value-added tax rate would be cut to 14% from 16% and corporation tax would be reduced to 25% from 30% under plans scheduled to come into force by April.

“My administration has made and will continue to make targeted state interventions to cushion every Kenyan from the shocks arising from this coronavirus,” Kenyatta said.

He said there would be 100% tax relief for Kenyans earning a monthly income of up to 24,000 Kenyan Shillings ($226) to increase their disposable income.

“I recognise the anxiety that this pandemic has caused millions of Kenyan families across our nation,” he said.

Kenya has confirmed 28 cases of the COVID-19 respiratory disease that the coronavirus can cause and is seeking assistance from the International Monetary Fund (IMF) and the World Bank as economic sectors such as tourism and farm exports take a hit.

The government will institute a daily curfew beginning on March 27 from 7 p.m. to 5 a.m. to curtail the spread of the virus, a measure taken after Kenyans failed to heed instructions to stay at home and avoid public gatherings, Kenyatta said.

Violators of these guidelines included religious and political leaders, he said, who flouted orders to self-quarantine.

The ministry of health said earlier this week that a priest and a senior county government official had tested positive for the coronavirus, and would face charges.

“If these measures are deemed to be inadequate, we shall without hesitation take ... more drastic measures,” Kenyatta said.

On Monday, the central bank cut its 2020 economic growth forecast to 3.4% from its initial 6.2% estimate as the outbreak saps demand from trading partners such as Europe, and disrupts supply chains and domestic production.

The bank instituted stimulus measures, cutting its benchmark lending rate by a larger than expected 100 basis points and reduced the amount of cash that banks are required to hold as reserves.

Central bank governor Patrick Njoroge said on Tuesday the government was seeking emergency assistance from the IMF of up to $350 million, and $750 million from the World Bank.

Finance Minister Ukur Yatani said on Monday the government planned to release billion of shillings in unpaid government billions and speed up tax refunds in the next two to three months to inject additional liquidity to the economy. ($1 = 106.0000 Kenyan shillings) (Reporting by Omar Mohammed and George Obulutsa; Editing by Toby Chopra and Timothy Heritage)

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