Master Class: Employment Tax and Compliance

Introduction

• Hosted by HR Box Africa in collaboration with Kenya Revenue Authority (KRA).
• Focus on empowering employees through HR solutions: payroll, leave management, HR services.
• Professional development session with a presentation by Nixon Omony, a seasoned tax expert.

Speaker Introduction

• Nixon Omony: Chartered holder with CFA Institute, CPA, advanced diploma in international taxation.
• Over 15 years of experience with KRA in tax administration.
• Trainer with Kenya School of Revenue Administration.
• Specializes in taxation of the digital economy.

Overview of Employment Tax

• PAYE (Pay As You Earn): Method of deducting tax from salaries.
• Applicable to all forms of employment income: salaries, wages, stipends, commissions.
• Includes cash and non-cash benefits.
• Deducted by the employer and not a final tax—employees file annual returns.

Key Deductions and Reliefs

• Social Health Insurance Fund (SHIF): 2.75% of gross salary, minimum 300.
• NSSF: Employee contribution of 1080.
• Affordable Housing Levy: 1.5% of gross salary.
• Personal Relief: Monthly relief of 2400.

Tax Bands

• Effective from July 1, 2023.
• Various bands for different income levels.
• Rates vary from 10% to 35% based on income.

Example Calculations

• Detailed examples provided for employees earning 50,000 and 1 million.
• Pay calculation includes deductions for NSSF, SHIF, and Housing Levy.

NSSF and Contributions

• Implementation of phased contributions as per the NSSF Act 2013.
• Maximum contributions adjusted recently.

Tax Refund Process

• Tax refunds for overpayments, incentives, and exemptions.
• Application required on KRA portal.
• Attach necessary documentation to expedite processing.

Tax Amnesty

• Ongoing until June 2025.
• Eligibility for waivers on non-filing penalties.
• Requires application via the KRA portal.

Emerging Issues and Case Studies

• Misclassification of employees as consultants.
• Taxation of board member allowances.
• Remote employment and taxation.

Withholding Tax

• Applicable on certain payments such as consultancy, legal fees, and more.
• Rates differ for residents and non-residents.

Conclusion

• Importance of proper classification and compliance with tax obligations.
• Encouragement to seek professional advice for complex tax issues.

Q&A Highlights

• Queries on consultancy agreements, taxation of pensions, director's fees, and more.

Additional Resources

• Participants encouraged to visit KRA's website for detailed guides on taxation.
• Contact HR Box Africa for HR solutions and further inquiries.