[SIZE=7]Treasury proposes 35pc PAYE for the rich, 3pc deduction on salaries towards Housing[/SIZE]
Thursday, May 04, 2023
The National Treasury is now proposing an amendment to the Employment Act of 2007 to provide for a 35 per cent income tax on all monthly salaries above Sh500,000.
According to a copy of the Finance Bill 2023 seen by Nation. Africa, Treasury is also seeking to deduct 3 per cent of all employees’ basic salaries towards a kitty known as the National Housing Development Fund. This deduction will be matched by another 3 per cent by the employer.
The Housing deduction for employees is capped at Sh5,000.
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According to the Bill, Treasury proposes that employees who qualify for affordable housing should have their contributions accrue and be used to finance the purchase of a house under the government’s affordable housing plan.
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For those who are not eligible for the affordable housing programme, Treasury is proposing three potential outcomes with the accrued savings seven years after their first deduction or upon retirement, whichever comes first:
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[li]The first is that they are allowed to transfer their accrued contributions to their retirement scheme.[/li][li]The second is that they are allowed to transfer the same to a person eligible for the affordable housing programme.[/li][li]The third is that they are allowed to transfer the same to their spouse or children or a dependent.[/li][/ol]
The final option is that they be allowed to draw out their contribution in cash provided the amount will be included in their taxable income.
Read: State to match govt workers’ 3pc contributions to housing fund in the new plan
The proposals by Treasury come as President William Ruto faces hurdles in achieving the ambitious targets he has in setting the ground to fulfil key promises to the people while balancing them with a shift from overreliance on debt.
He recently revived a proposal to impose higher taxes on Kenya’s super-rich and high-income earners, endorsing the introduction of a wealth tax that failed to sail through Parliament over the past four years.
In his inaugural speech at Parliament last year, he said that his administration will seek to raise taxes from the wealth accumulated by the richest Kenyans over getting revenues from workers and traders.
Read: Ruto pledges wealth tax on Tycoons to fix Kenya’s Budget