RWK Financial Compass

  In a significant move to modernize tax administration and improve taxpayer satisfaction, the Kenya Revenue Authority (KRA) has initiated comprehensive organizational reforms. These reforms are strategically aligned with KRA's 9th Corporate Plan, which aims to create an agile and responsive tax framework.

  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...