KRA Now Targets Casual Workers, Board Members In Housing Levy Deductions
Casual workers, including those engaged in the government’s affordable housing initiatives, will be taxed to fund the ambitious housing program.
Employers with weekly salaried casual employees will be required to deduct 1.5% of their gross pay and remit it to the Kenya Revenue Authority (KRA).
Even construction employees are included in the initiative.
As the Kenya Kwanza government aims to deliver 200,000 units per year, KRA will also target company directors who receive sitting allowances when they attend meetings.
“Salaries paid to casuals for services provided for some time are also subject to Affordable Housing Levy (AHL). Thus, AHL applies to all employees with contracts of service irrespective of the terms,” KRA’s Deputy Commissioner for Policy and Tax Advisory Esther Wahome said.
The government expects the levy to increase by more than Ksh30 billion over the next three years. Those juggling two jobs will also be subject to the increase. Both employers will be required to transmit the 1.5% deduction from the pay stub of the same employee separately using the same KRA PIN.
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President William Ruto has repeatedly framed the housing scheme and the tax burden as a means to create casual employment for the millions of unemployed youths in the country; as it turns out, they will also be taxed to build more houses.
The KRA bases its decision to target contingent workers on the 2007 Employment Act, which defines an employee as “a person employed for wages or salary, including an apprentice or indentured learner.”
The tax now applies to those who receive regular financial allowances, such as the board of directors, who earn after each meeting, typically four or fewer times per year.
However, it will be difficult to enforce compliance for those paying cash allowances to employees, such as weekly entertainment allowances, because some businesses will heavily rely on cash payments to prevent the costly compliance process.
The backdated tax began to be deducted from employees’ August paychecks after the courts delayed its initial July deduction.
KRA Now Targets Casual Workers, Board Members In Housing Levy Deductions