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Kenya Revenue Authority about to collect NSSF contributions

By - Macharia Kamau | July 14th 2013

By Macharia Kamau

The National Social Security Fund (NSSF) is inching closer to outsourcing the function of collecting member contributions to the Kenya Revenue Authority, which it expects will increase collections fivefold.

The two entities are almost concluding negotiations on an agreement which will see KRA collect monthly contributions from employers on behalf of NSSF for a commission. In addition to tax, KRA also collects the standards levy for the Kenya Bureau of Standards and the road maintenance levy for the Kenya Roads Board.

Labour Cabinet Secretary Kazungu Kambi said the Fund at the moment collects Sh600 million a month but this could increase to as much as Sh3 billion a month. He added that with the NSSF Bill 2013 would increase the monthly collections to Sh6 billion a month. The bill proposes to transform NSSF from a provident fund into a pension scheme and is expected to see significant increase in member contributions.

“Plans are underway to move the contribution collection to KRA, which we expect will increase collections from Sh600 million to Sh3 billion a month. This will further go up to Sh6 billion once the proposed NSSF bill goes through,” he said.

“The proposed outsourcing under a mutually agreed service level agreement  in my view, will plug unnecessary revenue leakages.” The plan to outsource NSSF contribution has been there for a while now, with the National Economic and Social Council (NESC) is pushing to transfer the mandate of collecting statutory deductions on behalf of NSSF as well as the National Health Insurance Fund (NHIF).

Kambi said the move, which will see KRA and NSSF share data, is expected to flush out employers who do not remit NSSF contributions. He noted as of now, there is a huge disparity between employers settling their Pay As You Earn (PAYE) and accounts.

“I’m privy to the information that thousands of employers are engaging in what can be termed as ‘NSSF contributions evasions’,” he said. “I have ordered an inter agencies forensic audit on the reconciliation of statutory payment accounts to flush out NSSF defaulters.” Kambi spoke on Friday in Nairobi when NSSF commissioned construction works for the completion of Hazina Trade Towers. The building, whose current anchor client is Nakumatt Lifestyle, will be extended by another 31 storeys and when completed have 39 storeys.

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