Kazi Tembo Mshahara Sungura: List of Mandatory Taxes to be Charged to Kenyans Following Court Decision

• President William Ruto's administration will continue to collect revenue through the Finance Act 2023
• The Supreme Court overturned the Court of Appeal's decision in July 2024, which called the law unconstitutional.
• A court of judges led by Chief Justice Martha Koome confirmed that lawmakers passed the tax law after considering public opinion.
• Key among the tax laws in the law is the housing levy, which will now add to the list of mandatory deductions such as SHIF on the employee's payslip.

Workers in the country Kenya they expect a reduction in payment documents in October 2024 after the court approves the Finance Law of 2023.

A seven-judge bench led by Chief Justice Martha Koome overturned the Court of Appeal's decision that called the financial law unconstitutional.

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In July 2024, the petitioners, including the senator of kiss Okiya Omtatah, opposed the finance law, citing the lack of qualifications for how public participation was conducted in the process of drafting the 2023 Finance Bill.

However, the Supreme Court confirmed that lawmakers passed the tax law after considering public opinion.

Is the House Tax Constitutional?

This followed a Supreme Court ruling that the Affordable Housing Act 2024 was constitutional, upholding the 1.5% Housing Tax on gross wages.

The complaint focused on sections 4 and 5 of the law, questioning the validity of the tax and the appointment of the Chief Commissioner of the Kenya Revenue Authority as the collector.

A three-judge bench comprising Justices Olga Sewe, John Chigiti, and Josephine Mong'are found that there was sufficient public participation and dismissed attempts to annul it.

Tax is part of the necessary mandatory deductions such as SHIF on the employee's payslip.

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What taxes will workers pay from October 2024?

1. House Tax

President William Ruto's administration introduced a 1.5% tax on gross wages of workers to support his affordable housing agenda.

Taxes sent to KRA is 1.5% of the total monthly salary of the employee, which corresponds to 1.5% of the total monthly salary of the employer.

For an employee who receives a gross salary of KSh 50,000 per month, the housing tax deduction will amount to KSh 750.

2. SHIF

On October 1, 2024, the government launched the Community Health Authority (SHA) to replace the National Hospital Insurance Fund (NHIF).

SHA instructed workers to deduct 2.75% of their workers' gross wages from the Social Health Insurance Fund (SHIF) on their October pay slips.

Employees earning a total salary of KSh 50,000 expect a deduction of KSh 1,375 towards SHIF.

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3. NSSF

In January 2024, the National Social Security Agency (NSSF) instructed employers to implement the schedule for the second year of the NSSF Act of 2013.

The NSSF Act of 2013 directed an increase in monthly NSSF contributions every year for five years.

The new deduction will enable employees to get KSh 50,000 every month, part of KSh 2,160.

4. PAYE

The 2023 Finance Act introduced a higher Pay as You Earn (PAYE) tax rate from 32% to 35%.

Starting this October, an employee who receives a gross salary of KSh 50,000 per month will pay KSh 6,622 in PAYE deductions.

What is the total tax deduction in October 2024?

The maximum deduction expected in the October 2024 payslip for workers in Kenya is a percentage of gross wages of about 50%.

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An employee earning KSh 50,000 will, therefore, pay KSh 10,877 monthly in taxes and duties to the government.

The employee's monthly salary will reach KSh 39,092 after all deductions.

Are Kenyans expecting tough economic times?

At the same time, the International Monetary Fund (IMF) revised its GDP growth estimate from 5.3% to 5%.

This comes after President William Ruto withdrew the controversial Finance Bill 2024 following anti-tax protests across the country.

The Central Bank of Kenya (CBK) attributed the slow growth to rising geopolitical tensions in the country, among other risks.

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Source: TUKO.co.ke