The Kenya Revenue Authority (KRA) has announced amendments to the computation of Pay As You Earn (PAYE) following the enactment of the Tax Laws (Amendment) Act, 2024, effective December 27, 2024. These changes affect taxable income, tax reliefs, and employment benefits.
Key Highlights of the Changes
- Deductions to Taxable Employment Income
Starting December 2024, the following will be deductible:- Affordable Housing Levy: Deductions pursuant to the Affordable Housing Act, 2024.
- Post-Retirement Medical Fund: Contributions capped at Kshs. 15,000 per month.
- Social Health Insurance Fund (SHIF) contributions.
- Mortgage Interest: Capped at Kshs. 360,000 annually (or Kshs. 30,000 monthly).
- Registered Retirement Fund Contributions: Limited to Kshs. 360,000 per year.
- Abolished Tax Reliefs
Tax reliefs no longer applicable include:- Affordable Housing Relief.
- Post-Retirement Medical Fund Relief.
- Exclusions in Gains and Profits from Employment
Certain benefits will not be taxed, including:- Benefits or facilities valued below Kshs. 60,000 per year (Kshs. 5,000 monthly).
- The first Kshs. 60,000 per year in meal value provided by an employer.
- Employer gratuities of up to Kshs. 360,000 for each year of service paid into registered retirement schemes.
Implications for Employers and Employees
These changes bring significant adjustments, requiring employers to update payroll systems to align with the new deductible limits and exemptions. Employees will need to monitor deductions such as SHIF contributions and housing levies for compliance.
How to Seek Clarifications
The KRA encourages individuals to contact their Tax Office or the KRA Contact Centre via 020-4-999-999 or email at callcentre@kra.go.ke.
For comprehensive details, visit the KRA website (www.kra.go.ke) or consult the Tax Laws (Amendment) Act, 2024.
