Kenyan Government Backdates Housing Tax To July 1, KRA To Collect Levy

• The Court of Appeal lifted the suspension of the Finance Act Act 2023, paving the way for the implementation of new tax measures
• KRA said all new tax changes should be collected based on the effective dates pronounced in the Finance Act 2023
• Besides the housing tax, other taxes set to be collected are 35% PAYE for workers earning over KSh 800,000 per month and 32.5% for workers earning between KSh 500,000 to KSh 800,000

The government has backdated the housing tax to July 1 after the Court of Appeal lifted the suspension of the Finance Act 2023.

Kenya Revenue Authority (KRA) has been appointed as the collection agent.

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.

KRA circular on Finance Act 2023

In an internal circular, Kenya Revenue Authority (KRA) ordered its officers to follow specific dates provided for in the Finance Act 2023 while implementing tax changes.

“All officers are advised to read this circular and the specific provisions of Finance Act 2023. Further, officers are advised that the provisions of the Act shall come into effect on the dates specified in Section 1 of the Act.

The Act provides the following effective dates July 1, 2023; September 1, 2023; and January 1st, 2024,” read the memo in part.

Following the order by the government, it means that all new tax measures, effective July 1, 2023, will have to be paid in the next payroll.

Besides the housing tax, other taxes set to be collected are 35% PAYE for workers earning over KSh 800,000 per month and 32.5% for workers earning between KSh 500,000 to KSh 800,000, among others.

Okiya Omtatah moves to Supreme Court

Treasury Cabinet Secretary Njuguna Ndung'u headed to the Court of Appeal to dispute orders barring the implementation of the Finance Act 2023.

Ndung'u argued that the freeze was costing the government over half a billion shillings daily in taxes and successfully had orders suspending implementation of the Act lifted.

Busia senator Okiya Omtatah and three others, dissatisfied with the move, filed a notice of appeal at the Supreme Court, an application that cost him KSh 450.