This month’s payslips

This month’s payslips

Salaried employees will begin receiving lesspay this month as result of the Court of  Appeal’s decision to allow the execution of  the Finance Act, which would allow the  government to backdate any taxes imposed to  July 1, 2023.

On Friday, July 28, the Court of Appeal liftedthe conservatory orders preventing the  Act’s execution, allowing the Kenya  Revenue Authority (KRA) to collect the new  taxes in  order to meet its aim of raising an  additional Ksh211 billion in the fiscal year  2023/2024.

This means that the new taxes, including  the mandatory housing levy and Pay As You Earn (PAYE) for high income earners, will  go  into force by the  end of August.

The Act also includes an Export and  Investment Promotion Levy, 16% Value  Added Tax (VAT) on petroleum goods, and turnover tax.


Gross pay is Ksh20,000.

Housing Tax = Ksh600

Insurance Assistance=Ksh112.50

Net Income=Ksh17,570




Personal Solace=Ksh0

Tax Prior to Relief=Ksh0

Taxable Earnings=Ksh18,920

What does “backdate taxes” mean?

In order to backdate taxes, the IRS will use  retrospective application, which implies that the July deficit will be collected in the  August payroll.

All Kenyan employees are required to  contribute 1.5 percent of their gross  monthly wage to the government’s  Affordable Housing initiative under the  Housing Levy.Employers, on the other  hand,  match and  remit contributions.

Employees who have already received their monthly wage for July 2023 will be required to make Housing levy contributions for both months (3% of their gross monthly  salary) and 1.5 in following months. 

For example, an employee earning Ksh50,000 per month will contribute Ksh1,500 at  the end of August, and Ksh750 in  subsequent months.

What much will be deducted from the pay stubs?

Aside from the 1.5% Housing Levy, another tax provision due to take effect is the  extended PAYE, which introduced two new rates: 35% PAYE for those earning more  than Ksh800,000 monthly and 32.5 percent  for those earning between Ksh500,000 and  Ksh800,000.

For example, an employee earning gross salary of Ksh600,000 will have Ksh11,473 removed from his or her pay due of the 32.5  percent tax rate and the 1.5 percent housing charge. How will the KRA carry it out?

Following the Act’s adoption, the Ministry of Lands designated the Kenya Revenue  Authority (KRA) as the collecting agent. The taxman will now aim to raise an additional Ksh211 billion in the fiscal year 2023/2024.

According to an internal memo sent to its  employees, the KRA modified the iTax  interface to reflect the new tax rates. 

According to reports, the taxman asked its  personnel to keep the systems ready in case the conservatory orders were overturned. “PAYE has been updated to reflect the new  bands imposed by the Finance Act 2023.” These modifications will be reflected on the consolidated payroll return beginning July 1, 2023. “Please advise taxpayers to download the  most recent P10 return from their profiles;  the updated return has also been updated  on the website,” stated part of an internal  KRA memo.

Busia Senator Okiya Omtatah moved to court seeking to block the Act from being implemented. The senator argued that the mandatory salary deductions to support President Ruto’s Affordable Housing agenda violated Kenyans’ rights.

Following his petition, the High Court issued conservatory orders against the implementation of the Act, arguing that Kenyans would be unfairly subjected to taxes.

The State, led by Treasury Cabinet Secretary Njuguna Ndung’u and the Attorney General’s office, however, moved to the appellate court seeking to lift the orders, arguing that the situation brought crisis to the government in relation to the government’s efforts to raise revenue. The Court of Appeal ruled in the State’s favour.

Senator Okiya Omtatah of Busia filed a legal challenge to the Act’s implementation. The senator claimed that forced wage deductions to fund President Ruto’s Affordable Housing agenda were a violation of Kenyans’ rights.

Following his suit, the High Court imposed conservatory injunction against the Act’s execution, claiming that Kenyans would be unfairly taxed.

The State, lead by Treasury Cabinet Secretary Njuguna Ndung’u and the Attorney General’s office, filed an appeal with the appellate court, stating that the situation had caused a crisis in the government’s efforts to gather money. The Court of Appeal found in favor of the State.

The petition will now be heard by three-judge panel comprised of Justices David Majanja, Lawrence Mogambi, and Christine Meoli.

Leave A Reply

Your email address will not be published.