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Employers to be fined TWO percent on housing levy defaults

Employers who fail to remit employees’ housing levy contributions will be fined two percent of the unpaid funds every month.

The National Assembly’s Finance and National Planning Committee has proposed further amendments to the Finance Bill, 2023 that seeks to finance President William Ruto’s Sh3.6 trillion budget.

The committee has suggested amending the Employment Act, 2007 so that employers will be subject to a two percent fine.

The committee had earlier reduced by half the Treasury’s proposal to establish a three percent employee contribution to the Fund that would be matched by employers.

The Finance Bill set a limit of Sh2,500 on both employee and employer monthly contributions.

The employer will be required to remit the deduction not later than nine working days after the month’s end.

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“An employer who fails to comply with this section shall be liable to payment of a penalty equivalent to two percent of the unpaid funds for every month the same remains unpaid,” Kuria Kimani, who chairs the Finance and Planning committee, said in a further amendment to the Bill.

The Bill, which MPs scrutinized at the Committee of the Whole House last evening, imposes a monthly levy payable by employer and employee at 1.5 percent of the monthly salary.

The housing levy is intended to finance the government’s ambitious plan to construct 250,000 affordable housing units every year.

The levy is one of the most contentious sections of the Finance Bill on the rate and making it compulsory.

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