Gov't Proposes Introduction Of Capacity Building Levy, Invites Kenyans To Submit Their Views

• The capacity building levy shall be set at 0.01% of the contract price for all contracts valued at KSh 10 million and above
• However, the levy proposed by the Public Procurement Regulatory Authority shall not apply where the contract is 100% funded by a donor
• If approved, the effective date of collecting the levy shall be determined by the Cabinet Secretary by gazette notice

The Kenyan government has proposed to operationalise the capacity-building levy pursuant to section 24(5) of the Public Procurement and Assets Disposal Act, 2015.

In a notice on Tuesday, August 15, the Public Procurement Regulatory Authority (PPRA) asked Kenyans to submit their views.

"The capacity building levy payable under section 24 (5) (d) of the Act shall be 0.01% of the contract price for all contracts valued at KSh 10 million and above.

The capacity building levy referred to in sub-regulation (1) shall not apply where the contract is one hundred per cent funded by a donor," PPRA stated.

If approved, the effective date of collecting the levy shall be determined by the Cabinet Secretary by gazette notice.

How is housing tax deducted?

In other news, the Kenya Revenue Authority clarified how the housing tax is deducted from employees' salaries.

In a statement issued on Tuesday, August 15, the taxman noted the levy is deducted from the basic salary and other allowances.

"Gross monthly salary constitutes basic salary and other regular cash allowances. This includes housing, travel or commuter, car allowances and such regular payments and would exclude those that are non-cash as well as those not paid regularly such as leave allowance, bonus, gratuity, pension, gratuity, pension, severance pay or any other terminal dues or benefits," it said.

Why gov't backdated housing tax

On Thursday, August 3, TUKO.co.ke reported the government backdated the housing tax to July 1 after the Court of Appeal lifted the suspension of the Finance Act 2023.

KRA was appointed as the collection agent. In an internal circular, KRA ordered its officers to follow specific dates provided for in the Finance Act 2023 while implementing tax changes.

According to the new housing tax, employees will be deducted 1.5% of their gross monthly income to fund the affordable housing programme, as the employer matches the same contribution.

However, the total amount contributed by the employee and their employer cannot exceed KSh 5,000.