Further Taxation for Employees to Fund Housing Project by Gov’t

The government’s directive to have employees being deducted funds from their salary to fund the Jubilee administration’s housing project will see employees receive salary less few thousands beginning April.

In a newspaper advertisement on Tuesday, the Housing ministry and the Kenya Revenue Authority announced that the housing fund levy “has come into effect”, meaning every employed Kenyan must remit 1.5 per cent of their basic salary for April to the National Housing Development Fund.

Employers will be required to send a figure matching the deductions made from employee’s deductions to the Housing Fund.

“The employers are required to deduct and remit the levy together with other statutory levies from both the employer and the employee by the 9th of each following month together with other payroll statutory deductions. The first contribution shall be due by May 9, 2019,” the advertisement stated.

Therefore, this means that if the employee earns a basic salary of Sh50,000, then it will be the duty of the employer to remit the deducted Sh750 to the Housing Fund with the amount not to exceed Sh5,000.

In the event that the employee is deducted Sh3,000 and the employer is deducted Sh3,000, then the government will not receive Sh6,000 as it exceeds the maximum amount but only Sh5,000.

The deduction became law by the enactment of the Finance Act 2018 that followed the budget statement presented to Parliament by Treasury Cabinet Secretary Henry Rotich.

“The employer shall remit both employee and employer contributions to the National Housing Development Fund before the ninth day of the following month,” says the Act.

According to the government, every employee whose salary will be deducted then will be at a position to “finance the purchase of a home under the affordable housing scheme” as stated in the Act.

In the event that one is ineligible for the purchase, then all the 15 year’s deductions will be transferred into his pension money or beneficiary, from the date of the first deduction.

“We had injunctions that halted the process, but the parties have agreed to withdraw them, so we are ready to proceed with the project,” said Housing Cabinet Secretary James Macharia.

“The project is now clear and will be launched in a few weeks. The first 2,000 units will be constructed in Park Road in Nairobi,” he said. This is set to happen soon after the first deductions are made.

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