RWK Financial Compass

  The Kenya Revenue Authority (KRA) is increasing its efforts to enforce compliance with the 1.5% Affordable Housing Levy, particularly targeting the informal sector. This move includes potential freezes on bank accounts and PINs for non-compliant traders. This newsletter provides an overview of the situation, potential implications, and recommendations for businesses and individuals in the informal sector. Affordable Housing Levy Act: The Affordable Housing Levy is a mandatory contribution, set at 1.5% of gross monthly salary for employees, with a matching contribution from employers. Individuals who are self-employed are also required to pay 1.5% of their gross income. The aim of the fund is to provide money for the design, development and maintenance of affordable housing, institutional housing and associated social and physical infrastructure. The Affordable Housing Act 2024 requires employers to deduct 1.5 percent of gross monthly pay to employees and...

  In this edition of RWK Africa Tax Insights, we delve into an important aspect of Kenya’s taxation system: Withholding Taxes . Withholding taxes play a pivotal role in ensuring that tax collection is efficient and timely. Here, we provide an in-depth look into the types of withholding taxes in Kenya, applicable rates, remittance requirements, and how businesses and individuals can stay compliant. What are Withholding Taxes? Withholding tax is a form of tax levied at the source of income. This means the payer (the entity or individual making the payment) withholds a portion of the income before passing the remaining balance to the recipient. The withheld tax is then remitted directly to the Kenya Revenue Authority (KRA) on behalf of the recipient. Kenya’s tax system applies withholding tax to various income sources, including salaries, interest, dividends, royalties, contract payments, and more. The tax is an essential tool for revenue collection and aims to simplify ta...

  We are pleased to share important updates on recent amendments to taxation laws affecting employment benefits, mortgage interest deductions, and investment incentives.  These changes aim to ease financial burdens on employees and businesses while promoting investment growth. 1. Revisions to Taxation of Employment Benefits Recent amendments have increased the threshold for non-taxable employment benefits, ensuring better support for employees. Key changes include: ·          The tax-free limit for employer-provided meals in a cafeteria or canteen has been raised from KES 48,000 to KES 60,000 per year. Specific guidelines will be provided by the Kenya Revenue Authority (KRA). ·          The cap on other non-taxable benefits has been increased from KES 36,000 to KES 60,000 per year. ·          The maximum allowable employer contributions to registere...

  Significant Economic Presence Tax in Kenya: A New Era for Digital Businesses . This newsletter provides an overview of the recently enacted Significant Economic Presence (SEP) Tax in Kenya, which has replaced the previous Digital Service Tax (DST). What is SEP Tax? SEP Tax is a tax levied on non-resident businesses that derive income from Kenya through digital platforms, even if they don't have a physical presence in the country. It aims to ensure that digital businesses contribute to the Kenyan economy. SEP Tax will replace the Digital Service Tax (DST), which was introduced in the Finance Act, 2020, and became effective in January 2021. The previous DST targeted 1.5% of gross transaction value and applied to both Kenyan and foreign digital service providers.

  As of February 1, 2025, significant changes to the National Social Security Fund (NSSF) contributions will take effect, impacting salaried Kenyans and their take-home pay. Here’s a detailed overview of these changes and their implications for taxpayers.

  In this edition of the RWK Africa newsletter, we provide a comprehensive breakdown of the Digital Service Tax (DST) in Kenya – its scope, requirements, implications, and how businesses can stay compliant with the latest tax regulations. What is the Digital Service Tax (DST)? The Digital Service Tax (DST) was introduced by the Kenya Revenue Authority (KRA) under the Finance Act of 2020 and became effective on January 1, 2021 . The primary goal of this tax is to ensure that businesses that generate income from providing digital services within Kenya contribute to the country’s tax revenue.