The government on Thursday, August 3 sought to clear the air on the implementation of the Housing Levy, which is one of the statutory deductions contained in the Finance Act 2023.

In a notice in the local dailies, the State Department for Housing and Urban Development informed Kenyans that the Affordable Housing Levy is now in effect from July 1.

As outlined in the Finance Act, the employee and the employer will pay the levy at a rate of one point five percent of the employee’s gross monthly salary by the employee, and one point five percent of the employee’s gross monthly salary by the employer.

Further, the notice stated that the employer should remit the deductions not later than nine working days after the end of the month in which the payments are due.

“The Cabinet Secretary Ministry of Lands, Public Works, Housing and Urban Development has appointed the Kenya Revenue Authority (KRA) as the collection agent.

KRA will issue a communication advising on the mode of collection,” read part of the notice. 

Also Read: How Ruto Plans to Impose More Taxes on Kenyans if Finance Act Flops

Court of Appeal Ruling

This comes after the Court of Appeal on Friday, July 28 lifted the order suspending the implementation of Finance Act 2023 until the appeal is heard and determined.

Justices Mohammed Warsame, Kathurima Minoti and Hellen Omondi ruled that the appeal filed by Treasury Cabinet Secretary Prof Njuguna Ndung’u has merit.

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What Housing Levy Means to Employees

Following the Court of Appeal’s judgement, and the subsequent announcement by the Ministry, the government has backdated the mandatory contribution. 

Therefore, this means that sections which were to be applied from July 1 like the 1.5% Housing Levy on gross income and 32.5% tax for people earning between Ksh.500,000 and Ksh.800,000 and a 35% for those earning above Ksh.800,000 will be implemented and backdated.

Additionally, this implies that KRA will collect the July taxes in August even though this month payments have already been made.

KRA already rolled out the system to affect the double deductions before Court of Appeal lifted the suspension on the Act.

Therefore, employees and employers will pay compensation for July deductions in August as explained earlier.