CRS News Flash 15 August 2023 – KENYA – Lifted suspension of the Finance Act and the Affordable Housing Levy

LIFTED SUSPENSION OF THE FINANCE ACT AND THE AFFORDABLE HOUSING LEVY
It is important that employers note the following:

Collection of Affordable Housing Levy through the lifting of the suspended Kenya Finance Act

Following the President’s assent to the Finance Act on 26 June 2023, a lawsuit was filed which led to a temporary halt of the Act’s implementation by the High Court.

The High Court’s order was subsequently lifted on 28 July 2023 by Kenya’s Court of Appeal. As a result of this decision, the measures of the Finance Act 2023 generally take effect immediately. The measures were discussed in detail in the CRS News Flash of 14 July 2023.

Following the lifting of the order, the Cabinet Secretary, Ministry of Lands, Public Works, Housing and Urban Development informed the Kenya Revenue Authority (KRA) through a public notice dated 3 August 2023 that all employers are required to deduct the Affordable Housing Levy (AHL) with effect from 1 July 2023.

The monthly levy payable by the employer and employee are:

·        For the employee: 1.5% of the employee’s gross monthly salary;

·        For the employer: 1.5% of the employee’s gross monthly salary.

This amount will be collected as a tax by the KRA, along with other levies.

The levy is to be computed on the gross pay which will be inclusive of allowances, both cash and non-cash benefits, advanced to the employee. In essence, gross salary refers to all sums, benefits and allowances due to an employee pertaining to employment services. Please note that gross pay does not include reimbursements for payments made on behalf of the employer.

Employers are required to declare the AHL under sheet “M” of the PAYE return on itax and generate a payment slip under the tax head “Agency Revenue” and tax sub-head “Housing Levy” and make payments at KRA agent banks or mobile money.

An employer must remit the payments due by no later than nine working days after the end of the month in which the payments are due.

The P10 forms (PAYE return forms) have been updated to reflect the new PAYE bands and housing levy and are available on the KRA website under the sub-heading “iTax Downloads”: https://www.kra.go.ke/publications