AfriPulse
The Kenya Revenue Authority (KRA) has issued a public notice to employers, employees, and the general public regarding the application of income tax deductions, reliefs, and exemptions under the amended Income Tax Act, Cap 470.
The directive, released on October 2, 2025, follows the enactment of the Finance Act, 2025, and takes effect immediately. It instructs employers to ensure accurate calculation of Pay As You Earn (PAYE) for employee salaries, taking into account all applicable tax benefits and statutory requirements.
“The Kenya Revenue Authority (KRA) wishes to inform employers, employees, and the general public that the Finance Act, 2025, amended the Income Tax Act, Cap 470 (‘the Act’), to mandate employers to apply all relevant tax deductions, reliefs, and exemptions when computing income tax on employee emoluments,” the notice partly reads.
KRA outlined five key obligations employers must follow. First, all resident employees must receive personal relief as provided under the Act. Employers must also allow insurance relief, mortgage interest deductions, and contributions to registered pension schemes and post-retirement medical funds, provided employees declare them and submit the necessary supporting documents within statutory limits.
“Apply personal relief to all resident employees as stipulated under the Act. Allow insurance relief, mortgage interest deductions, and contributions to registered pension schemes and post-retirement medical funds – provided these are declared by the employee and supported by the necessary documentation and fall within statutory limits.”
Employers must also include statutory deductions in their PAYE calculations, such as contributions to the Social Health Insurance Fund and the Affordable Housing Levy.
“Deduct statutory levies and contributions paid by employees, such as the Affordable Housing Levy and contributions to the Social Health Insurance Fund, in accordance with the Act.”
The tax agency also instructed employers to apply exemptions for employees holding valid tax exemption certificates, within the prescribed limits. Employees, in turn, were urged to submit supporting documentation promptly to ensure smooth processing of payroll obligations.
KRA emphasized the importance of accuracy and timeliness in PAYE return submissions. Employers were reminded to ensure that all returns fully reflect applicable deductions, reliefs, and exemptions in accordance with the updated law.
“Recognise and apply tax exemptions for employees who hold valid tax exemption certificates, subject to the prescribed limits. Ensure accurate and timely submission of PAYE returns, reflecting all applicable reliefs, deductions, and exemptions.”
For clarification, both employers and employees can visit their nearest Tax Service Office (TSO) or contact KRA directly. Employees are advised to provide all required documentation promptly to support claims for deductions and reliefs, where applicable.
Source: NairobiWire.com | Read the Full Story…
