The government will charge employers a two per cent penalty should they fail to remit the Affordable Housing Levy (AHL), which was backdated after the Court of Appeal lifted conservatory orders issued against the implementation of the Finance Act 2023.
Kenya Revenue Authority (KRA), in a notice published on Friday, August 4, explained that the employers had an obligation to remit the 1.5 per cent Housing Levy deduction by the ninth of every month.
Employers will also pay their 1.5 per cent contributions within the same period, thus remitting 3 per cent in total.
Thus, KRA expects employers to remit July and August 2023 deductions by September 9 or risk a two per cent penalty of the unpaid funds.
"An employer who fails to comply with the law shall be liable to payment of a penalty equivalent to two per cent of the unpaid funds for every month if the same remains unpaid," read the notice in part.
For instance, if an employer was to remit Ksh200,000 in total for the month's contributions and fail, they will pay Ksh4,000 in penalties.
Monthly AHL deductions will be remitted to the government through KRA agent banks or mobile money.
It was also clarified that all 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.
KRA's statement came a day after the Ministry of Lands and Housing backdated the Housing Fund enshrined in the Finance Act 2023.
As a result, employees will be cut more than the August salaries. For instance, ordinarily, a Kenyan earning Ksh20,000 was to pay Ksh300. However, with the backdating, Ksh600 will be deducted from the August pay.
Employees also face further deductions after other elements of the Finance Act, including increased PAYE for those earning above Ksh500,000, were backdated.
In the new directive, Those earning above Ksh500,000 to Ksh800,000 will pay 32.5 per cent of their salary for PAYE.
Those receiving over Ksh800,000 in salaries will pay 35 per cent.
However, the Law Society of Kenya (LSK) filed an appeal against the Finance Act 2023 at the Court of Appeal on Friday, August 4, seeking to block the government from collecting the new taxes.
LSK argued that the new taxes were unconstitutional and enacted when Kenyans are grappling with a high cost of living.
