Tax Relief

Safaricom saves Shs 2.three billion. of Covid-19 tax breaks

Safaricom Sacco Chairman Paul Masava, ICT PS Jerome Ochieng and Safaricom Chief Corporate Affairs Stephen Chege presented the cake on the occasion of the 20th anniversary of Safaricom Sacco Ltd.[Elvis Ogina,Standard]

Wireless operator Safaricom earned $ 2.3 billion in tax breaks after the Treasury Department introduced tax incentives for businesses last year to help them weather the economic disruption of Covid-19 last year.

According to Safaricom’s annual report, corporate tax incentives reduced tax bills by Sh2.3 billion, although new laws to reduce the wear and tear allowance cut the benefits.

“On April 25, 2020, the state enacted the Tax Law (Amendment) Act, 2020, which lowered the corporate tax rate from 30 percent to 25 percent,” the firm said in its annual report. “The new rate of 25 percent applied for the period between April and December 2020. As a result of this change, the company’s total corporate income tax was reduced by Shs 2.3 billion.”

Last year, Finance Minister Ukur Yatani announced temporary tax cuts, which included a 2 percent cut in value-added tax (VAT) to 14 percent as part of measures to cushion the economy from the pandemic.

Safaricom says, however, that the benefits from the tax breaks have been undermined by reduced allowances in other ways. According to Telekom, the changed tax rates have also reduced the wear and tear discounts for different categories of assets. “Safaricom’s wear allowance for the year was $ 20.5 billion in shutters for the 12 months ended March 31, 2021. If tariffs had not changed, the wear and tear allowance would have been $ 36.5 billion.”

Safaricom paid Sh 105.9 billion last year. in duties, taxes and royalties to the Ministry of Finance and, since its inception, Shill 915 billion.

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