The Kenya Revenue Authority (KRA) has announced that all employers are required to deduct the Affordable Housing Levy (AHL) twice this month after its implementation was backdated.
In a notice on Friday, August 4, KRA explained that the employers should remit 1.5 percent AHL for the month of August and 1.5 percent for July bringing to a total of 3 percent.
“With effect from 1st 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,” read the notice in part.
The taxman also noted that 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". The AHL payments will be made at KRA agent banks or mobile money.
KRA further warned that employers who will fail to remit the AHL deductions will risk a two percent penalty for the unpaid funds.
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“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,” KRA added.
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The notice comes even as the Law Society of Kenya (LSK) moved to court to block the new taxes contained in the Finance Act 2023.
Among the taxes LSK wants to be blocked is the Housing Levy arguing that mandatory deduction for affordable housing threatens the social economic interest of Kenyans.
"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," the court documents read in part.
