Employers face 2pc fine on housing levy defaults

Parliament in session. FILE PHOTO | JEFF ANGOTE | NMG

Employers who fail to remit employees' housing levy contributions will be fined two percent of the unpaid funds every month.

The National Assembly's Finance and National Planning committee has proposed further amendments to the Finance Bill, 2023 that seeks to finance President William Ruto’s Sh3.6 trillion budget.

The committee has proposed to amend the Employment Act, 2007 to impose the two percent penalty on employers.

Earlier, the committee had cut by half the Treasury proposal to introduce a three percent employee contribution to be matched by employers to the Fund.

The Finance Bill had capped both employee and employer monthly contribution at Sh2,500.

The employer will be required to remit the deduction not later than nine working days after month end.

“An employer who fails to comply with this section shall be liable to payment of a penalty equivalent to two percent of the unpaid funds for every month the same remains unpaid,” Kuria Kimani, who chairs the Finance and Planning committee, said in a further amendment to the Bill.

The Bill, which MPs scrutinised at the Committee of the Whole House last evening, imposes a monthly levy payable by employer and employee at 1.5 percent of the monthly salary.

The levy is intended to finance the government's ambitious plan to construct 250,000 affordable housing units every year.

The levy is one of the most contentious sections of the Bill on the rate and making it compulsory.

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