The Kenya Revenue Authority (KRA) has recently provided clarity on the implementation of the Affordable Housing program, following a High Court ruling that gave the green light for President William Ruto’s initiative. Here’s what you need to know:
- Deductions and Contributions: Effective from March 19, 2024, all employers are required to deduct 1.5% of their employees’ gross monthly salary. This deduction will be matched by an equal contribution from the employer. The contributions are to be made through KRA agent banks or mobile money using the eCitizen Paybill Number 222 222 or USSD code *222#.
- Tax Relief: Kenyans who contribute to the levy will be eligible for a housing tax relief of 15% of the deducted amount. To qualify for this relief, individuals must save under the Boma Yangu platform for at least a year and apply for the relief thereafter.
- Compliance and Penalties: It’s crucial for both employers and employees to comply with the Affordable Housing Levy deductions. Failure to do so may result in penalties equivalent to three percent of the unpaid funds for every month.
- Remittance Deadline: The due date for remitting the Affordable Housing Levy is the 9th working day after the end of the month in which the gross salary was due, received, or accrued.
- Reporting and Deductions: Employers are required to declare the Affordable Housing Levy under sheet ‘M’ of the PAYE return on iTax. They must generate a payment slip under the tax head ‘agency revenue’ and tax sub-head ‘Housing Levy’ for making payments.
- Tax Deductibility: Employers’ contributions to the Affordable Housing program are allowable deductions under Section 15 of the Income Tax Act.
This directive from the KRA follows the High Court’s decision not to grant conservatory orders to halt the implementation of the Affordable Housing program. Despite a petition seeking to delay the collection of funds, President Ruto signed the Affordable Housing Bill into law on March 19, 2024.
The Affordable Housing program aims to address the housing needs of Kenyans, and these deductions are a crucial part of its implementation. It’s essential for all stakeholders to understand their obligations and ensure compliance to support the success of this initiative.
As always, stay informed and engaged with developments that impact you and your community.