Tax Alert: Understand the Affordable Housing Levy (AHL) enacted under the Finance Act 2023.

Previously proposed in the Finance Bill 2023 as a Housing Fund contribution at 3% of gross salary and capped at Ksh. 5000, it has now was enacted in the Finance Act 2023 as an uncapped levy at 1.5% of gross salary.

Effective 1st July 2023, employers are required to remit the Affordable Housing Levy before 9th of the the month following the month of deduction.

This levy is calculated as the sum of:

1.5% of employee’s salary contribution by the Employee, and;
1.5% of employee’s salary contribution by the Employer.

Gross Pay

“Gross pay” is inclusive of cash allowances including housing, travel, car allowances, and any other regular cash payments.

It excludes non-cash allowances, cash allowances that are not paid regularly such as bonus, gratuity, pension, leave allowance , terminal dues and benefits, and reimbursements of payments incurred on behalf of the employer.

All employees irrespective of their contracts shall pay the affordable housing levy.

Affordable Housing Relief

The Affordable Housing Relief provided in the Income Tax Act will not be applicable and hence cannot be used to reduce the Levy contributed.

Payment for purchase of a house under the Affordable Housing Scheme will however be allowable for the affordable housing relief.

Affordable Housing Levy Return

The levy will be declared in the PAYE( Pay As You Earn) return, and remitted together.

Penalty

For every month the Affordable Housing Levy remains unremitted, the employer shall be liable for a penalty of 2% of the unpaid amount.

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CPA Gitau Nahashon

Senior Managing Partner

CPA Gitau Nahashon is an accomplished finance and accounting professional with over 21 years of experience in the fields of accounting, tax, audit, advisory, corporate governance, and business consultancy. Nahashon is the founding partner of GK Nahashon & Company, a rapidly growing medium-sized audit firm located in Rosslyn, Limuru Road.

He is a member of the Institute of Certified Public Accountants of Kenya (ICPAK), Kenya Institute of Management (KIM), and the Institute of Internal Auditors Kenya Chapter (IIA). CPA Nahashon is a passionate accountant, financial analyst, tax litigant, and advisor as well as corporate finance advisor. All this emerges from his background of Bachelor of Commerce, Finance, and Accounting as well as his professional training as a Certified Public Accountant (CPA-K) coupled with his many years of hands-on experience. He is a licensed practicing auditor and consultant with the Institute of Certified Public Accountants of Kenya. He is an MS Excel enthusiast having trained several high-ranking finance professionals in financial modeling, forecasting, and reporting using sophisticated Excel functions and formulae.

CPA Nahashon is a certified QuickBooks pro advisor, a position he uses to offer support in QuickBooks online as well as advise clients on the usage of QuickBooks for their accounting, payroll, and inventory management. This certification increases the confidence that clients have in our expertise in automated accounting software.

CPA Nahashon is extremely zealous of compliance, he has worked for several employers and private clients shepherding them to remain compliant with the regulations, policies, and guidelines of various regulators. As a risk and compliance professional, CPA Nahashon has brokered many deals and structured compliance highways for many organizations.

CPA Nahashon has enjoyed a thriving career in the private sector where he served in various capacities within the manufacturing, real estate, educational, and banking sectors. His major accomplishments include overseeing effective system migration, automation of MIS, conducting gap analysis for new CBK guidelines, successful acquisition structure, corporate governance training, financial reporting, training advanced MS Excel, successful audit engagements, setting up a successful microfinance company, several successful funding proposals among others.

This professional accountant has held the hands of many start-ups until they are mature with huge turnovers. He has mid-wifed micro enterprises to become medium-sized entities some of them with balance sheet of over Kshs 1B. He has successfully transitioned chamas to birthing enterprises that are current industry and market leaders.

He has served in various boards of academies, schools, SME’s and serves in advisory board of a thriving business in the service industry. He is currently a board chairman in one of the SME’s he serves as an independent director. He is an astute leader with impeccable people leadership skills and serves the community in several leadership positions transforming lives and offering hope to the destitute.