Employers will continue to deduct three per cent Affordable Housing Levy from their employee's gross salary, the Ministry of Lands has stated.
The clarification came a day after the High Court in Nairobi declared the Housing Levy contained in the Finance Act 2023 as unconstitutional. The court, however, suspended the implementation of the judgment until January 10, 2024.
In a statement by Lands Cabinet Secretary Alice Wahome on Wednesday, November 29, the employers will be required to continue remitting the funds, failure to which, they will be fined.
“Please note that the employer’s contribution to the Affordable Housing levy is an allowable deduction under Section 15 of the Income Tax Act,” said Wahome.
She added; “An employer who fails to comply with the law shall be liable to payment of a penalty equivalent to two per cent of the unpaid funds for every month if the same remains unpaid.”
Yesterday, High Court Judges David Majanja, Christine Meoli and Lawrence Mugambi found the levy was unconstitutional and vague adding that there was no law allowing the Kenya Revenue Authority (KRA) to collect it.
Additionally, the court found that the levy was discriminatory since it targeted only employed Kenyans and the government did not demonstrate why it excluded other categories of income earners.