The National Treasury wants Parliament to approve tax exemptions for 187 employees and managers of Kenya Airways who were retrenched between January and March.
“The legal notice seeks to exempt from income tax the send-off package…paid to the 187 retrenched employees of KQ PLC in accordance with the provisions of section 13(2) of the Income Tax Act,” Treasury Cabinet Secretary Ukur Yatani, said in a memo to the National Assembly.
KQ, as is known by its international code, saw staff resign en masse last year as the airline resorted to a hiring freeze, unpaid leaves, pay cuts, and retrenchments to survive the Covid-19 turbulence.
KQ’s remaining workforce took pay cuts of between 35 percent and 75 percent.
The Income Tax Act empowers the Treasury Cabinet secretary, by notice in the gazette, to exempt from tax any income or class of income which accrued in or was derived from Kenya.
In the notice dated July 7, and tabled in Parliament, Mr Yatani set a raft of conditions that were to be met by KQ.
The Treasury said the income tax exemptions will not apply to other pensions benefits paid to the 187 employees.
“The retrenched employees shall not be re-employed by Kenya Airways Limited in any capacity or under any terms whatsoever before the expiry of five years from the date of the retrenchment,” Mr Yatani said in the notice.