Teachers’ Payslips To Have New Look After Removal Double Taxation
The payslip of a teacher will have a new look following the move by Treasury CS to eliminate double taxation for Proposes to Eliminate Double Taxation for Employees.
Treasury Cabinet Secretary Njunguna Ndung’u on Thursday, June 13, announced that there are measures put in place to deal with double taxation for salaried Kenyans.
While reading the 2024/2025 Budget, Ndung’u acknowledged that salaried Kenyans were taxed double given that the Housing Levy and the Pay As You Earn (PAYE) are taxed on the same gross salary base.
Teachers’ Payslips To Have New Look After Removal Double Taxation
Therefore, he proposed amendments to make the Housing Levy a deductible tax.
This move will see PAYE and Housing Levy taxed on different gross income levels.
For example, under the existing paradigm, if a person earns Ksh40,000 in gross salary, the Housing Levy reduction will be calculated based on that amount.
Similarly, the PAYE will be calculated based on the Ksh40,000 gross pay. However, by making the levy a deductible tax, the PAYE may now be calculated using (Ksh40,000 minus the Housing Levy).
Ultimately, with the new modifications, the taxman will collect less than he does now.
“The Affordable Housing Levy and PAYE are calculated from the same base, resulting in double taxation.” To solve this, he advocated making the Housing Levy a deductible expense.
Teachers’ Payslips To Have New Look After Removal Double Taxation
“This means that there is a tax saving for Kenyans therefore affording Kenyans more money in their pockets.”
The Housing Levy was introduced in the Finance Act 2023 and is set at 1.5% of gross pay and income. Despite the CS’s pronouncement, Kenyans should expect additional wage deductions in the coming days as the Social Health Insurance Fund (SHIF) prepares to debut.
Registration for the new health insurance begins on June 21. Kenyans would pay 2.75 percent of their gross salary to be protected under the new insurance program. Deductions will begin on July 1.
