Kenya – Amendments to PAYE Computation Pursuant to the Tax Laws

The Kenya Revenue Authority (KRA) has issued a public notice outlining changes to the PAYE (Pay As You Earn) computation as per the Tax Laws (Amendment) Act, 2024, effective December 2024. The key changes are as follows:

Amounts Deductible in Determining Taxable Employment Income:

• Contributions to the Affordable Housing Levy under the Affordable Housing Act, 2024.
• Contributions to a post-retirement medical fund, capped at Kshs. 15,000 per month.
• Contributions made to the Social Health Insurance Fund (SHIF).
• Mortgage interest up to Kshs. 360,000 per year (Kshs. 30,000 per month) for loans borrowed from approved financial institutions to purchase or improve residential property for personal use.
• Contributions to registered pension or provident funds or registered individual retirement funds up to Kshs. 360,000 per year (Kshs. 30,000 per month).

Tax Reliefs Ceasing to Apply:

• Affordable Housing Relief.
• Post-Retirement Medical Fund Relief.

Gains and Profits from Employment Shall Not Include:

• The value of a benefit, advantage, or facility provided by an employer where the aggregate value is less than Kshs. 60,000 per year (Kshs. 5,000 per month).
• The first Kshs. 60,000 per year (Kshs. 5,000 per month) on the value of meals provided by an employer.
• An amount not exceeding Kshs. 360,000 per year paid by an employer as gratuity or similar payment in respect of services rendered for each year of service to a registered retirement pension scheme.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.

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Kenya – Amendments to PAYE Computation Pursuant to the Tax Laws – December 2024

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