Attention Employers: Housing Fund Levy Coming Into Effect
In a notice published in the newspapers today, the Kenya Revenue Authority and the Ministry of Transport, Infrastructure, Housing and Urban Development have informed the public that employers should start deducting 1.5% of employees’ basic salary effective this month (April). Employers will match the deductions and submit by 9th of the following month. The first contribution will be due 9th May 2019.
The maximum deduction is KES 5,000 i.e. employers should deduct and match 1.5% of employee’s basic salary upto a maximum of KES 5,000 in a given month.
The fund was established by an act of parliament last year with the intention of financing affordable housing which is part of the government’s Big 4 agenda.
Employers are required to register their employees for the fund.
Contributions by shall be accessed by employees for purposes of offsetting housing loans, security for mortgage or housing
development after five years of uninterrupted contribution. Where the contributor is not eligible for a house under the affordable housing scheme, their contribution may be transferred to a pension scheme, to another person under the fund or en-cashed but only after 15 years of contribution.
The penalty for failure to register under the fund or failure to make contributions will be imprisonment for a term of two years or to a fine not exceeding ten thousand shillings or to both.
Strangely though, the notice does not provide details of where and how employers should register and make payment. According to the notice ”information relating to the payment process shall be communicated in due course”.
Familiarize yourself with the regulations here: