Following the High Court's recent judgment on various Petitions against the Finance Act 2023, the Ministry of Lands, Public Works, Housing, and Urban Development (MoLPWHUD) has delivered an important announcement regarding the Affordable Housing Levy (AHL).
Housing Cabinet Secretary Alice Wahome, leading the Ministry, has outlined in a statement the implications of the court's decision and the subsequent 45-day Stay granted for the AHL's continued enforcement until January 10, 2024.
"The Ministry of Lands, Public Works, Housing and Urban Development (MoLPWHUD) wishes to notify members of the Public that following the judgement of the High Court of Kenya on the various Petitions against the Finance Act 2023 which was delivered in open Court on the 28th of November 2023, a 45-day Stay was subsequently issued by the Honorable Court for the Affordable Housing Levy (AHL) to continue being effected until 10th January, 2024," the statement read.
Underpinning this directive is a mandate for all employers to persist in deducting the Affordable Housing Levy from employees' gross salaries and promptly remitting the specified amounts to the Kenya Revenue Authority (KRA).
The established contribution percentages, maintaining a 1.5 per cent deduction from both the employee and the employer, remain in force.
Crucially, the Wahome emphasizes that the employer's contribution to the Affordable Housing Levy is a recognized and allowable deduction under Section 15 of the Income Tax Act.
Wahome warned that failure to adhere to this legal obligation carries financial penalties, with non-compliant employers facing a penalty equivalent to two per cent of the unpaid funds, accumulating monthly until the outstanding amount is settled.
"Please note that the employer’s contribution to the Affordable Housing levy is an allowable deduction under Section 15 of the Income Tax Act," the statement read.
"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."
The CS also expressed the Ministry's aim to support employers during this extended period.
This recent development places a renewed responsibility on employers nationwide to navigate the legal framework and financial consequences associated with the Affordable Housing Levy until the specified date in January 2024.
As the extended implementation of the Affordable Housing Levy unfolds, employees are left to grapple with the increased deductions, prompting a closer examination of the economic implications for the workforce.