Enforcement of the New Finance Act 2023
Please take note that the Court of Appeal has lifted the suspension of Finance Act 2023.
New PAYE Rates (Effective 1st July 2023) The Act revises the current PAYE bands as follows:
| PAYE BANDS (ANNUAL) |
RATE (KES) |
| On the first KES 288,000 |
10% |
| On the next KES 100,000 |
25% |
| On all income over KES 5,612,000 |
30% |
| On the next KES 3,600,000 |
32.5% |
| On the next KES 9,600,000 |
35% |
So what does this mean?
All annual employment income that is currently more than KES. 388,000 is subject to PAYE at a rate of 30%. In an effort to increase tax revenues, the Act establishes new tax brackets for all annual incomes up to KES. 6 million at 32.5% and for incomes exceeding KES. 9.6 million at 35%.
Housing Levy
The Finance Act 2023 introduces a Housing Levy, deducted at 1.5% of the employee's gross monthly pay, with the employer matching 100% of the employee's contribution as part of the overall monthly levy contributions, effective July 2023.
Below are the Monthly Tax Bands following the New Finance Bill that was passed:
| Salary |
Rate |
Monthly Relief |
|
Ksh 1 - 24,000
|
10%
|
Ksh 0
|
|
From Ksh 24,000 - 32,334
|
25%
|
Ksh 2,400
|
|
From Ksh 32,334 - Ksh 500,000
|
30%
|
Ksh 2,400
|
|
From Ksh 500,000.00 - Ksh 800,000
|
32.5%
|
Ksh 2,400
|
|
From Ksh 800,000
|
35%
|
Ksh 2,400
|
|
