A recent directive from the Kenya Revenue Authority (KRA) has announced the initiation of the affordable housing levy deductions, starting with the March payslips.
According to the guidelines outlined by the tax authority, the deductions for the affordable housing levy (AHL) will commence from Tuesday, March 19th, 2024. Employers are mandated to deduct the AHL from their employees’ gross salaries, along with the employer’s contribution of 1.5 per cent of the employee’s gross monthly salary.
The KRA, through a public notice, stated, “With effect from 19th March 2024, all employers are required to deduct the affordable housing levy (AHL) from the employee’s gross salary and remit together with the employer’s contribution [of one point five per cent (1.5 per cent) of the employee’s gross monthly salary.”
Furthermore, the KRA has specified the due date for remitting the affordable housing levy, which is set as the 9th working day of the subsequent month following the accrual or receipt of the gross salary or income. This new regulation extends the levy to Kenyans in the informal sector, ensuring compliance with a High Court ruling that deemed the previous act unconstitutional due to its restriction solely to salaried employees in the formal sector.
Employers are instructed by the KRA to declare the AHL under sheet “M” of the Pay as You Earn (PAYE) return on itax, generate a payment slip labeled under the tax head “agency revenue” and tax sub-head “Housing Levy,” and subsequently make payments through KRA agent banks or mobile money platforms such as eCitizen Paybill Number 222 222 or by dialing *222#.
Non-compliance with the law will result in penalties, as stated by the KRA, with individuals failing to meet the requirements liable to pay a penalty equivalent to three per cent (3 per cent) of the unpaid funds for every month they remain unpaid.
