KRA strikes again as they go after July Housing Levy that was not deducted
KRA said an employer who fails to comply with the law shall be liable to payment of a penalty equivalent to two percent of the unpaid funds for every month if the same remains unpaid.
The Kenya Revenue Authority (KRA) issued a statement directing employers to deduct the Affordable Housing Levy from the employee’s gross salary and remit it together with the employer’s contribution for July.
“KRA would like to inform members of the Public that with effect from 1st July 2023, all Employers are required to deduct the Affordable Housing Levy from the employee’s gross salary and remit together with the employer’s contribution,” the statement said in part.
At the same time, KRA announced to the public that they have been appointed as the collecting Agent of the Affordable Housing Levy (AHL).
“Kenya Revenue Authority (KRA) would like to inform members of the Public that the Cabinet Secretary, Ministry of Lands, Public Works, Housing and Urban Development through a Public Notice dated 3rd August, 2023, has appointed Kenya Revenue Authority as the collecting Agent of the Affordable Housing Levy (AHL)," they said.
KRA went on to direct employers on how they are supposed to deduct their required AHL from their employee’s gross salary.
“With effect from 1t July 2023, all Employers are required to deduct the AHL from the employee’s gross salary and remit together with the employer’s contribution as follows:
“One point five per centum (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,” the statement added.
The statement adds; “KRA wishes to further clarify 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” and tax sub-head “Housing Levy” and make payments at KRA agent banks or mobile money.
“Please note that the employer’s contribution to the Affordable Housing Levy is an allowable deduction under Section 15 of the Income Tax Act,” the commission added.
KRA said an employer who fails to comply with the law shall be liable to payment of a penalty equivalent to two percent of the unpaid funds for every month if the same remains unpaid.
However, the Law Society of Kenya has moved to court to challenge the constitutionality of the Finance Act 2023 and wants the government stopped from implementing it.
"We are seeking the court to issue orders prohibiting the government from implementation, further enforcing section 10 (2) (3) of the Income Tax Act as amended by Section 7 of the Finance Act 2023," read the court documents.
LSK argues that the decision of the respondents to gazette and enforce the Finance Act 2023 that introduces mandatory affordable housing levy, and implementation, threatens the social-economic interests of Kenyans against the principle of social justice.
"This Court ought to safeguard the people’s right to life which is on the verge of being rendered meaningless since their opportunity to make a living is under threat by the impugned Section 7, 33 (a)and 84 of the Finance Act," LSK says.
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