- Tax Laws (Amendement) Act, 2024, to come into force on December 27th, 2024.
- Applicable deductions in determining the taxable employment.
- Caeasure on the existence of the tax relief: Affordable Housing Relief and Post-Retirement Medical Fund Relief.
- Changes on profits and gains consideration.
The Kenya Revenue Authority (KRA) has notified the employers and the public on the effectiveness of the Tax Laws (Amendemnet) Act, 2024, leading to the PAYE computation changes. Effective December 27th, 2024 Act will become applicable, henceforth, in the future PAYE computations.
“Kenya Revenue Authority (KRA) informs employers and the public that pursuant to the Tax Laws (Amendment) Act, 2024, which comes into force on 27th December, 2024, the following changes shall be applicable in the computation of PAYE for December 2024 and subsequent periods.”
In determining the taxable employment income, the amount deductible shall include the Affordable Housing Levy, pursuant to the Affordable Housing Act, 2024, a post-retirement medical fund contribution limit of Ksh. 15,000 per month, and the contribution made to the Social Health Insurance Fund (SHIF).
The Act has also initiated a mortgage interest deduction, not exceeding Ksh. 360, 000 per year, equivalent to Ksh. 30, 000 per month. However, the deduction shall only be initiated once borrowed by a person from one of the first six financial institutions as specified in the Fourth Schedule to the Income Tax Act to purchase or improve premises occupied by the person for residential purposes.
Additionally, any contribution made to a registered pension or provident fund or a registered individual retirement fund of a limit not exceeding Ksh. 360, 000 annually, equivalent to Ksh. 30,000 per month, shall be subject to deduction.
The Kenya Revenue Authority (KRA) has also notified employers and the public that Affordable Housing Reief and the Post-Retremnt Medical Fund Relief shall cease to apply henceforth, effective December 27th, 2024.
The Tax Laws (Amendment) Act, 2024, also recommended the “value of a benefit, advantage, or facility granted in respect of eployment, where the aggregate value is less than Ksh. 60,00 per year (Kshs. 5,000 per month),” from being included as gains and profits from the employment.
This shall as well be applicable to the value of the meals provided by an employer, which is the first Kshs. 60, 000 per year, equivalent to Ksh. 5,000 per month. Additionally, a gratuity payment by the employer of an amount not exceeding Kshs. 360, 000 in respect of employment or services rendered for each year of service paid into a registered retirement pension scheme shall not be included as gains and profits from employment.
