Statutory deductions are mandatory legal requirements.
Employers are required to register, deduct and remit within the specified dates to the relevant authority. Failure to adhere attracts penalties and interest.
The following are the major statutory deductions.
PAYE (Pay As you Earn)
Deducted fromthe employee’s income and remitted to KRA on or before the 9th of the following month.
Applicable to incomes of Ksh. 24,000 and above.
Some incomes are however not subjected to PAYE (see here).
Current PAYE rates are (see here).
NHIF ( National Health Insurance Fund)
Deducted on all salary incomes based on a standard rate ranging from Ksh 500 to Ksh. 17000 every month.
The deadline for paying NHIF is the 9th of the following month (how to make NHIF payment.)
Insurance relief is provided at 15% but limited to Ksh 5,000 per month (Ksh. 60,000 per year).
NSSF (National Social Security Fund)
Deadline for paying NSSF is on the 9th of the following month; deducted and remitted by the employer.
The New Rates 2023;
Tier I- Set at 12% of the Lower Earning Limit of Ksh 6000. (12% of Ksh 6000 is ksh.720 paid with equal contribution of Ksh 360 by the employer & Ksh 360 by the employee).
Tier II-Set at a cumulative 12% of the Upper Earning Limit of Ksh 18,000. ( Illustration: Employee earning Ksh. 15,000: the difference between the Lower Earning Limit and the employee’s income is Ksh. 9,000. 12% is 1080;-paid in the equal contribution of Ksh 540 by the employer & Ksh 540 by the employee). Ksh.18,000 is set as the upper limit (hence for all incomes starting Ksh.18,000 and above; illustration 12% of the difference between the lower limit and upper limit (Ksh 12,000)=Ksh 1,440. Paid in the equal contribution of Ksh 720 by the employer and Ksh 720 by the employee).
NITA (National Industrial Training Authority
All employers are required to register as NITA Levy payers (how to register).
The employer pays Ksh. 50 per employee per month, including casual employees. Not deducted from the employees’ emoluments.
The deadline is on the 5th of the following month.
Payment is done to KRA.
Housing Levy
This was introduced under the Finance Bill 2023.
Effective 1st July 2023, The National Housing Development Fund will see contributions of 1.5% of employees income effected.
Deadline to remit is on the 9th of the following month. Failure to remit will result to a monthly penalty amounting to 5% of the amount due.
