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The Kenya Revenue Authority (KRA) which was appointed as the collecting agent for the Affordable Housing Levy (AHL), backdated the AHL to July 1, 2023. The AHL is a new tax that was introduced in the Finance Act 2023, and it is intended to help fund the construction of affordable housing in Kenya.
The AHL will be deducted from the gross salaries of employees and employers at a rate of 1.5%. Employees will be responsible for paying 1.5% of their gross salary, and employers will be responsible for paying 1.5% of the employee’s gross salary.
KRA has issued a public notice with instructions on how employers should deduct and remit the AHL. 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.” Payments can be made at KRA agent banks or mobile money.
Employers who fail to comply with the law will be liable to a penalty of 2% of the unpaid funds for every month that the levy remains unpaid.
KRA says that it is committed to ensuring that employers are optimally supported in complying with the AHL provisions. The authority will continue to engage and collaborate with stakeholders to ensure that the levy is implemented effectively.
The AHL is a significant new tax, and it is important that employers and employees are aware of their obligations. KRA has provided clear instructions on how to comply with the law, and employers should take steps to ensure that they are in compliance.