RIBRAN and Associates

Important Update: Social Health Insurance (SHI) Act Takes Effect We are writing to inform you about the implementation of the Social Health Insurance Fund which took effect on the 1st of October 2024. Key Points: a. Mandatory Contributions: Employers are now required to deduct 2.75% of an employee's gross salary or wage each month and remit it to the Social Health Insurance Fund by the 9th of the following month. b. Gross Salary Definition: Gross salary or wage includes basic salary and regular allowances paid to an employee. Non regular allowances like bonus payments, are not subject to SHIF. c. Tax Relief: In our view, contributors to SHIF are eligible for tax relief of 15% on the total contribution amount. This relief is granted under Section 31 and Paragraph 2, Head A of the Third Schedule of the Income Tax Act. However, the total tax relief available for both insurance premiums and SHIF contributions is capped at KShs. 5,000 per month or KShs. 60,000 annually. d. Employer Matching Contributions: Unlike other social security schemes, employers are not required to match employee contributions to the SHIF. How We Can Help: To ensure smooth compliance with the SHI Act, At RIBRAN we are ready to assist you with the following: 1. Review of Payroll Processes: We can review your payroll processes to ensure compliance with the new deductions and remittance requirements. 2. Calculation and Remittance: We can assist in calculating the monthly deductions and ensuring timely remittance to the relevant authorities. 3. Tax Implications: We can advise on the potential tax implications of the SHI contributions and any applicable tax reliefs. Please feel free to contact us if you have any questions or require further assistance.

KRA Public Notice on Migration of Legacy System Tax Balances The Kenya Revenue Authority (KRA) recently issued a public notice on 31 July 2024, informing taxpayers of the successful migration of VAT and Income Tax ledger balances from the Legacy System to the iTax System. Taxpayers have been notified of these migrated balances via their iTax registered email addresses, and the balances are accessible in the taxpayer’s iTax profile under the 'Taxpayer Legacy Account' menu. Detailed statements can also be downloaded from the 'Debt & Enforcement' menu on iTax. The KRA emphasized that these balances are not new tax assessments and are therefore not subject to the objection or appeal process. They are, however, subject to further adjustments if additional information, not previously considered, is provided. Taxpayers are advised to review these migrated balances and have until 31 December 2024 to raise any concerns. Any remaining debit balances after this date will be confirmed, and demand notices for taxes due will be issued. KRA also assured taxpayers that during the revalidation process, Tax Compliance Certificates or other tax services will not be withheld if other requirements are met. Validated credit balances that qualify as tax overpayments will be available for utilization as per the Tax Procedures Act, and taxpayers who agree with the debit balances should arrange to pay the outstanding amounts. At RIBRAN, we have a dedicated team ready to assist you during this revalidation process and with any concerns related to your migrated tax balances.

Update on Finance Act 2023 Court Ruling The Supreme Court of Kenya (SCOK) has issued conservatory orders suspending the Court of Appeal's ruling that declared the Finance Act, 2023 unconstitutional. This suspension will remain in effect until the SCOK hears and determines the appeal filed by the Cabinet Secretary for the National Treasury & Planning and others, challenging the 31 July 2024 judgement. The consolidated appeals are scheduled to be heard on 10th and 11th September 2024. As a result of the SCOK's conservatory orders, the provisions of the Finance Act, 2023 will remain in force until the appeal is decided. This means that all the provisions introduced by the Finance Act 2023, including excise duty on money transfer fees will revert to 15%, VAT on petroleum products will return to 16%, the higher PAYE tax bands will stay in place, and the withholding VAT payment deadlines will remain as stipulated under the Act. We will keep you informed of any further developments.

Stay Informed 📢 - Fringe Benefit and Deemed Interest Rates for April - June 2024

KRA to deploy the VAT auto populated return with effect from the February 2024 Tax Period.

On 26th January 2024, the Court of Appeal issued a ruling dismissing the reinstatement of the Affordable Housing Levy by the Government, deeming it unconstitutional. The Federation of Kenyan Employers (FKE) has also advised its members not to deduct the levy unless the Court of Appeal rules otherwise after the hearing of the substantive appeal or in the alternative. In light of these developments, we strongly recommend that you deduct the levy from the payroll, but temporarily hold remittance of the amount to KRA, until the matter is heard and determined by the Supreme Court. We will diligently monitor any further developments and keep you promptly informed of any updates.

The Commissioner has published the applicable rates for Deemed Interest and Fringe Benefit for Q1 of 2024.