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Firm owners seek to know if house levy tax deductible

tax

The 1.5 per cent levy will be deducted from employee earnings with the employer expected to match the amount. FILE PHOTO | NMG

Manufacturers want the State to declare if the planned National Housing Development Fund levy is tax-deductible among other details.

A one-day forum in Nairobi heard that the ambiguity of law had created confusion ahead of its implementation.

“The government, for instance, has not said if you do not get a house, the money will be added to your pension accessible upon retirement. The levy raises more questions than offers a solution. How will they treat a couple in formal employment? Will each person contribute to the fund?” posed audit and tax consultancy firm EY’s associate director John Gikima. Mr Gikima said employers will gladly contribute to the levy if it is made tax deductible, but would be forced to reduce staff if the expense eats into their profit.

The 1.5 per cent levy will be deducted from employee earnings with the employer expected to match the amount. Contributors can use the funds to buy low-cost houses via outright purchase, tenant purchase or the employer supported housing schemes. Acting Kenya Association of Manufacturers vice chairman Tobias Olando said the government needs to create an all-inclusive team to oversee implementation of the housing development projects to win the confidence of Kenyans.