Kenya’s PAYE System Overhauled: Is Your Salary Going to Be Affected?
The Kenya Revenue Authority (KRA) has unveiled new adjustments to the Pay As You Earn (PAYE) system, following the recent signing of the Tax Laws (Amendment) Bill 2024 into law by President William Ruto.
The changes, set to take effect from December 27, 2024, will affect how employees’ taxable income is determined and what deductions are applicable.
In a public notice issued on Thursday, December 19, KRA informed the public and employers about these changes, which will impact the calculation of PAYE from December 2024 onward.
Notably, the revisions are in line with the newly passed Tax Laws Amendment Act 2024.
Key changes include the introduction of new deductible contributions that will reduce taxable income for employees.
These deductions will include the Affordable Housing Levy, contributions to a post-retirement medical fund (with a limit of KSh 15,000 per month), the Social Health Insurance Fund (SHIF), mortgage interest (up to KSh 30,000 per month or KSh 360,000 per year), and contributions to a registered pension or provident fund (also capped at KSh 30,000 per month or KSh 360,000 per year).
On the other hand, the new tax regime will see the removal of certain tax reliefs, including the Affordable Housing Relief and the Post-Retirement Medical Fund Relief.
Additionally, employees will no longer be taxed on benefits or facilities provided by employers if their aggregate value is less than KSh 60,000 per year (KSh 5,000 per month).
This exemption includes meals provided by the employer as well as gratuities or similar payments not exceeding KSh 360,000.
As part of its ongoing efforts to enhance tax compliance, KRA emphasized its commitment to ensuring full adherence to the tax regulations.
The Authority introduced the iWhistle platform, a technology-driven initiative designed to encourage the public to report corruption and tax evasion. By doing so, users can earn rewards for their efforts.
KRA’s efforts appear to be paying off, with the agency’s tax collections reaching a milestone of KSh 1 trillion for the 2024/25 financial year by November 2024.
This performance brings the country closer to meeting its fiscal goals for the year.
In Other News: Gachagua Exposes Officer Who Followed Him 180 Kilometers to Makueni
Kenya’s PAYE System Overhauled: Is Your Salary Going to Be Affected?
