KRA Orders Employers: Deduct Housing Levy from March 19
The Kenya Revenue Authority (KRA) has stated that deductions for the housing levy regarding the government’s affordable housing initiative will commence starting March 19th.
On Thursday, the tax authority instructed employers to subtract 1.5 percent from their employees’ total salaries and forward this amount, along with an equal 1.5 percent contribution for each employee, for remittance.
“With effect from 19 March 2024, all employers are required to deduct the affordable housing levy from the employee’s gross salary and remit together with the employer’s contribution as follows: One point five percentum (1.5%) of the employee’s gross monthly salary by the employee; One point five per centum (1.5%) of the employee’s monthly gross salary by the employer,” KRA said.
Moreover, all other individuals earning income in Kenya must pay 1.5 percent of their total earnings as a housing levy to the Kenya Revenue Authority (KRA).
The levy must be paid by the ninth working day following the conclusion of the month.
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Employers will make housing levy payments at KRA agent banks or mobile money through the eCitizen Paybill Number 222 222 or the USSD code *222#.
“Any person who fails to comply with the law shall be liable to payment of a penalty equivalent to three percent (3%) of the unpaid funds for every month if the same remains unpaid,” added KRA.
On Tuesday, President William Ruto endorsed the contentious Affordable Housing Bill, thereby clearing the path for the reinstatement of housing levy deductions.
The High Court ruled the levy unconstitutional in 2023, a decision later affirmed by the Court of Appeal, which concluded that the levy was implemented without a proper legal basis.
The administration led by Ruto asserts that the suspension offers an opportunity to revamp the bill, leading to the establishment of a fresh legal framework for the levy.
A newly submitted petition, however, contests the law, arguing that it seeks to introduce communist principles and alleges that it enables the national government to usurp the housing responsibilities of county governments.
KRA Orders Employers: Deduct Housing Levy from March 19