The government has backdated compulsory deductions from employees and employers to the Housing Fund to July 1, 2023 after the court lifted the suspension of Finance Act, 2023.

The Court of Appeal last week momentarily lifted the conservatory orders that barred the implementation of the divisive Act that was challenged by Busia Senator Okiya Omtatah.

The decision by the Appellate Court gave the Government the leeway to start implementing additional taxes it badly needs but had been put on hold after the court suspended the Act.

According to a public notice published by the Ministry of Lands, Public Works, Housing and Urban Development on Wednesday, the Housing Levy will take effect from July 1, 2023.

“The levy is payable by the employee and employer at a rate of one point five per centum of the employee's gross monthly salary by the employee, and one point five per centum of the employee's monthly gross salary by the employer, as outlined in the Finance Act 2023,” read the ministry’s notice.

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The development means those who earn between Sh500,000 and Sh800,000 per month will be taxed at 32.5 per cent while salaries above that amount will attract a 35 per cent charge.

The new levy deductions meant to finance President William Ruto’s ambitious affordable housing agenda are to be remitted by the employer 9 working days into each new month.

“This shall be remitted by the employer not later than nine working days after the end of the month in which the payments are due,” stated the Ministry in its notice.

Kenya Revenue Authority (KRA) has been appointed as the collection agent of the new levy and is expected to communicate in due course to advise employers on the collection modes.