Employees to suffer double taxation in August as State backdates deductions to July 1
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Government backdates the implementation of new taxation laws to July 1 in line with Finance Act 2023 in a major blow to employees
Government backdates the implementation of new taxation laws to July 1 in line with Finance Act 2023 in a major blow to employees.
Employees will have their August payslips shrink with the government set to implement a double deduction of the mandatory housing levy.
This is after the government backdated the mandatory contribution towards the Housing Levy proposed in the Finance Act, 2023 to July 1.
The move follows the lifting of the orders barring implementation of the Act by the Appellate Court last week.
A public notice by the Ministry says the levy is payable by the employee and employer 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 monthly gross salary by the employer.
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“The levy is payable by the employee and employer at a rate of one point five per centum of the employee’s gross monthly salary by the employee, and one point five per centum of the employee’s monthly gross salary by the employer, as outlined in the Finance Act 2023,” part of the notice read.
With the backdating of the contributions, then it means that employees will have their pay reduced by three percent as employers move to implement the statutory deductions.
With the levy in place, high-income earners of more than Ksh500,000 to Ksh800,000 a month will pay 32.5 percent tax while those above Ksh800,000 will be subjected to 35 percent tax an increase from the previous maximum tax on salary which was 30 percent.
The ministry says the monies will be collected by the Kenya Revenue Authority (KRA).
“KRA will issue a communication advising on the mode of collection,” the notice added.
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