KRA sets stage to effect new tax charges under Finance Act, 2023
KRA updates the iTax portal to reflect new tax charges in line with the controversial Finance Act of 2023
KRA updates the iTax portal to reflect new tax charges in line with the controversial Finance Act of 2023.
The iTax portal has been updated by the Kenya Revenue Authority (KRA), paving the way for the implementation of new fees in accordance with the Finance Act.
“The system is being updated today (on Tuesday),” KRA said in response to the question regarding the updating in line with the Finance Act of 2023.
The Finance Act of 2023 introduced two new income tax rates, with 32.5 percent for those earning between Sh500,000 and Sh800,000 per month and 35.0 percent for those earning above Sh800,000.
These new Pay As You Earn (PAYE) rates are among the significant changes that are now reflected.
This means that anyone making Sh500,000 or more per month should anticipate a decrease in their take-home pay when the payrolls for August 2023 are completed.
Kenyans whose salary is Sh800,000 per month will see their take-home pay reduce from Sh565,416 to Sh548,988 once the Housing Tax and the new 35.0 percent tax rate is factored in.
Another major update on iTax is the incorporation of the Housing Tax at 1.5 percent of employees’ gross salary uncapped matched by another 1.5 percent by the employer towards the Housing Development Fund.
According to the National Assembly Finance and Planning Committee, the government is looking to collect Sh83.0 billion in the current financial year through the Housing Tax.
In addition, there’s a 3.0 percent Digital Assets Tax and a 5 percent withholding tax on content creators.
KRA has not stated if it will retroactively apply July 2023 collections, however, Technical Circular 71, which was distributed to staff members of the authority as an internal memo, stated that the new tax rates’ effective dates will be applied in accordance with the Finance Act 2023.
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This suggests that KRA will implement the Act’s effective dates of July 1, 2023, September 1, 2023, and January 24, 2024.
“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 1st, 2023; September 1st, 2023; and January 1st, 2024,” the KRA memo signed by Deputy Commissioner in charge of corporate policy, Maurice Oray, states.
On July 28th the Court of Appeal lifted conservatory orders barring implementation of Finance Act 2023, paving the way for KRA to begin collections targeting an extra Sh211.0 billion worth of taxes in the period between July 2023 and June 2024.
However, Busia Senator Okiya Omtatah and others have since filed a notice of appeal with the intention to challenge the Court of Appeal decision at the Supreme Court.
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