Government to charge penalty for late remittances of backdated taxes
Government introduces a two percent penalty charge for late remittance of backdated taxes by employers
Government introduces a two percent penalty charge for late remittance of backdated taxes by employers.
Employers who fail to reimburse the Affordable Housing Levy (AHL), which was retroactively imposed after the Court of Appeal lifted protective orders against the implementation of the Finance Act 2023, would be subject to a 2% fine from the government.
In a notice released on Friday, August 4, the Kenya Revenue Authority (KRA) stated that employers were required to pay the 1.5% Housing Levy deduction by the ninth of every month.
Employers will contribute a total of 3% by paying their 1.5% contributions throughout the same time frame.
As a result, KRA anticipates employers to submit July and August 2023 deductions by September 9 in order to avoid a 2% late payment penalty.
“An employer who fails to comply with the law shall be liable to payment of a penalty equivalent to two percent of the unpaid funds for every month if the same remains unpaid,” read the notice in part.
Monthly Affordable Housing Levy deductions will be remitted to the government through KRA agent banks or mobile money.
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It was also clarified that all employers are required to declare the AHL under sheet “M” of the PAYE return on iTax and generate a payment slip under the tax head agency revenue.
KRA’s statement came a day after the Ministry of Lands and Housing backdated the Housing Fund enshrined in the Finance Act 2023.
As a result, employees will be cut more in the August salaries.
Employees also face further deductions after other elements of the Finance Act, including increased PAYE for those earning above Ksh500,000, were backdated.
In the new directive, Those earning above Ksh500,000 to Ksh800,000 will pay 32.5 percent of their salary for PAYE.
Those receiving over Ksh800,000 in salaries will pay 35 percent.
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