The Kenya Revenue Authority (KRA) has issued a new directive regarding the implementation of the Affordable Housing Levy (AHL), which is set to commence deductions from March payslips onwards. This levy, aimed at funding the government's housing program, carries implications for both formal and informal sector workers. Let's explore the key details outlined by the KRA and the implications for Kenyan taxpayers.


The implementation of the Affordable Housing Levy marks a significant step in addressing Kenya's housing challenges and funding the government's housing program. With directives from the KRA, employers and employees alike are mandated to adhere to the new regulations, which include deductions and remittances outlined in the Affordable Housing Bill.

Quick Summary:

  • The KRA has directed employers to commence deductions for the Affordable Housing Levy from March payslips onwards.
  • The levy, set at 1.5% of gross monthly earnings, applies to both formal and informal sector workers.
  • Employers are required to remit the levy along with their contributions by the 9th working day of the following month.

Implementation Guidelines

According to the guidelines issued by the KRA, the Affordable Housing Levy will be deducted from employees' gross salaries at a rate of 1.5%. This deduction applies to both formal sector workers and individuals in the informal sector. The due date for remitting the levy is set as the 9th working day of the following month, ensuring timely contributions towards the government's housing program.

Addressing Informal Sector Participation

The new legislation aims to address concerns raised by a High Court ruling that rendered the earlier Act unconstitutional. By extending the levy to workers in the informal sector, the government seeks to promote inclusivity and ensure equitable participation in funding the housing program. This move aligns with efforts to enhance social welfare and address housing challenges across all segments of society.

Compliance and Enforcement

Employers are instructed to declare the Affordable Housing Levy under sheet "M" of the Pay as You Earn (PAYE) return on the iTax platform. Additionally, they are required to generate a payment slip and remit the levy through designated KRA agent banks or mobile money platforms. Non-compliance with the law may result in penalties equivalent to three percent of the unpaid funds for every month of non-payment, underscoring the importance of adherence to the regulations.