Proposed tax reforms
The government of Kenya’s strategy on tax and revenue reforms aims to significantly grow revenue in the 2020/21 fiscal year and beyond. To this end, several tax policies and revenue administration reforms have been put in place to enhance taxpayer education, make greater use of technology, and implement a simplified tax regime for the informal sector.
Introduction of new National Housing Development Levy
Kenya is in the process of introducing a National Housing Development Fund (NHDF). Employers and employees will each be required to contribute 1.5% of the employee’s monthly basic salary to the fund, but the combined contribution is capped at 5,000 Kenyan shillings (KES) per month. The NHDF is not yet operational, as contributions will only be made once certain regulations are in place. However, the High Court suspended implementation of the 1.5% NHDF contribution via interim orders until the petition is heard and determined.
Exemption for individuals registered under the Ajira Digital Program
The Finance Act, 2019 has introduced an exemption for individuals who are registered under the Ajira Digital Program from income tax for three years beginning 1 January 2020.