Small enterprises and property owners are beginning to experience the impact of the Affordable Housing Levy(AHL) following the clarification from the Kenya Revenue Authority(KRA) that they will be required to contribute 1.5%of their total sales starting May 9.
According to a letter from the Head of Domestic Taxes Department, North Rift Region, the specified amount is payable by the 9th of every month.
This announcement has sparked worries regarding potential hikes in rental charges and product prices.
The said income, the tax authority clarified covers: the gross sales receipt (amount chargeable to turnover tax), the gross rental income and any other sales, before subjecting the same to VAT.
“We would like to urge you to take advantage of the Tax Amnesty program introduced in the Finance Act, 2023 by paying all the principal taxes outstanding for the period up to December 2022, by June 30th, 2024,” read part of the letter.
Landlords earning rental income ranging from Sh280,000 to Sh15 million per month are subject to a 7.5% levy on their total rental income.
It is anticipated that rents will increase as landlords transfer the additional cost to tenants, worsening the already elevated cost of living.
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Property owners or any other affected persons are advised to visit the nearest KRA office or contact their usual account manager for any clarification.
The Affordable Housing Act has also implemented a 1.5% levy on the total salary of each employee or on an individual’s earned or accumulated gross income not exempt from the Levy.
Employers are required to match each employee’s contribution by contributing an equivalent sum to the Levy.
The Kenya Revenue Authority (KRA) clarified that all employers must report the Affordable Housing Levy (AHL) using sheet “M” in the PAYE return on the iTax platform.
Following this, they are required to create a payment slip categorized under “Housing Levy” and subsequently submit payments at designated KRA agent banks or through mobile money using the eCitizen Paybill Number 222 222 or by dialing *222#.
According to the authority, the employer’s contribution to the Affordable Housing Levy is considered an eligible deduction under Section 15 of the Income Tax Act.
For a considerable duration, the Kenya Revenue Authority (KRA) has endeavored to expand its reach into the informal sector but has encountered challenges in increasing the number of taxpayers due to the lack of permanent establishments among these businesses.
