Kenya – 2023 Statutory Changes
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Effective from 28 July 2023, the Kenyan Government has lifted the suspension barring the implementation of the 2023 Finance Act.
The Finance Act of 2023 proposed the below changes to take effect from the 1st of July 2023:
Exemption of travel allowance from Personal Income Tax
- Travel allowances paid to an employee performing official duties if the allowance is based on the standard mileage rate approved by the Automobile Association of Kenya.
Increased rate for personal tax
The Act introduces two more tax rates and tax bands for individuals, namely:
- 5% – for individuals earning between KES 500,000 to KES 800,000 per month.
- 35% – for individuals earning above KES 800,000 per month.
National Housing Development Fund
The Act introduces a mandatory housing levy to be contributed by both the employer and employee. The contribution is broken down as follows:
- Employee Contribution –1.5% of the employee’s monthly gross salary.
- Employer Contribution –1.5% of the employee’s monthly gross salary.
The employer’s contribution to the Affordable Housing Levy is an allowable deduction under Section 15 of the Income Tax Act. The employer is responsible for remitting the levy by the 9th day of the following month.
Please note that these changes may be implemented retroactively.
For employers who have already filed their monthly return, they can file an amended return.
Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change
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