The Office of Auditor General (OAG) has flagged the United Democratic Alliance (UDA) Party over alleged failures to comply with key statutory tax and payroll obligations.
A report by OAG, has exposed that UDA failed to remit deductions for PAYE, NSSF, SHIF, and the Affordable Housing Levy over the 2023/2024 and 2024/2025 financial years.
“However, records indicate that the Party did not withhold any deductions in respect of Pay As You Earn (PAYE), National Social Security Fund (NSSF), Social Health Insurance Fund (SHIF), or Affordable Housing Levy,” the report read.
The ruling party has now violated laws governing withholding tax and procurement-related deductions in public finance and taxation.
UDA Fails to Deduct Statutory Payroll Contributions
The Auditor General’s report indicates that UDA processed employee salaries amounting to Ksh 128,208,145 but failed to deduct mandatory statutory contributions including PAYE, NSSF, SHIF and the Affordable Housing Levy.
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OAG notes that statutory deductions totaling Ksh 69,830,714 were not withheld and remitted to the relevant authorities. Of this amount, Ksh 35,003,822 relates to the 2023/2024 financial year and Ksh 34,826,892 relates to 2024/2025.
“Analysis of payrolls revealed that statutory deductions totaling Ksh 69,830,714 should have been withheld and remitted to the respective authorities, comprising Ksh 35,003,822 and Ksh 34,826,892 for the financial years 2023/2024 and 2024/2025, respectively” read part of the report.
The audit cites violations of several legal provisions, including Section 37(1) of the Income Tax Act, which requires employers to deduct and remit PAYE, and Section 4 of the Affordable Housing Act, 2024, which mandates a 1.5% employee contribution matched by the employer.
It also references the NSSF Act, 2013, which requires a 6% contribution, shared equally between the employer and the employee.
The report states that failure to comply with these provisions denies the exchequer revenue and exposes the Party to penalties arising from the unremitted taxes denying the employees social protection vested in the Kenyan Law.
Irregularities in Procurement Deductions and Withholding Tax
The Auditor General also identified lapses in procurement-related tax compliance. According to the report, UDA paid suppliers Ksh 219,350,149 for goods and services without withholding the mandatory 0.03% Public Procurement Capacity Building Levy.
This requirement is set out in Paragraph 3(1) of the Public Procurement Capacity Building Levy Order, 2023, which requires that procuring entities to deduct and remit levy on all eligible contracts.
In addition, the audit found that withholding tax deducted from suppliers was not remitted to the Kenya Revenue Authority (KRA), contrary to Section 23(2)(a) of the Public Finance Management Act, 2012.
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UDA Faces Questions Over Statutory Deductions Shortfall
UDA’s management has now breached multiple legal requirements governing taxation, procurement, and social contributions.
From the report, UDA has now violated laws including:
- Income Tax Act (Cap. 470), Section 37(1)
- Affordable Housing Act, 2024, Section 4
- National Social Security Fund (NSSF) Act, 2013
- Public Procurement Capacity Building Levy Order, 2023 (Paragraph 3(1))
- Public Finance Management Act, 2012 (Section 23(2)(a))
- Income Tax Act (Withholding Tax Provisions)
The law places responsibility on accounting officers to ensure compliance with all tax obligations and statutory levies.
Violations now expose UDA to penalties, interest charges, and enforcement action by tax authorities.
