Employed Kenyans are required contribute 1.5% of their gross monthly salary as Housing Levy, with their employers matching the same amount. Self-employed individuals also contribute 1.5% of their gross monthly income. These Housing Levy contributions are collected by the Kenya Revenue Authority (KRA) and are directed to the Affordable Housing Fund, which finances the construction of affordable housing units.
The government, through KRA, has made it clear that Housing Levy defaulters will face repercussions. So, what exactly awaits those who don’t pay the housing levy?
1. Penalties: The Affordable Housing Act stipulates a penalty of 3% of the unpaid amount for each month the levy remains unpaid. This means that the longer you delay, the more you’ll owe in penalties.
2. Debt Recovery: The KRA can pursue the unpaid levy as a civil debt. This could involve legal action to recover the outstanding amount, potentially leading to asset seizures or other debt recovery measures.
3. Blocked PINs: The KRA has the power to block Personal Identification Numbers (PINs) for taxpayers who are in default. This can have significant implications, as a valid PIN is required for various transactions, including employment, business registration, and accessing government services.
4. Frozen Bank Accounts: In severe cases, the KRA can freeze bank accounts of persistent defaulters to recover the owed levy. This can disrupt financial activities and cause significant inconvenience.
5. Suspension of Services: Defaulters may be denied access to certain government services, such as obtaining tax compliance certificates. These certificates are often required for various purposes, including business dealings and tendering for government contracts.