The Kenya Revenue Authority (KRA) has issued a notice to employers, employees and the general public regarding the application of income tax deductions, reliefs, and exemptions under the amended Income Tax Act, Cap 470. KRA commissioner general Humphrey Wattanga. The taxman issued a notice to employers.The directive, which will be implemented immediately, follows the enactment of the Finance Act, 2025. What is KRA’s notice to employers? KRA said employers should accurately calculate Pay As You Earn (PAYE) for employees’ emoluments, taking into account all tax benefits and legal obligations. “The Finance Act, 2025, amended the Income Tax Act, Cap 470, to mandate employers to apply all relevant tax deductions, reliefs, and exemptions when computing income tax on employee emoluments,” KRA stated. As required by the Act, KRA directed employers to provide personal relief to all resident employees.
It also instructed employers to allow personal insurance relief, mortgage interest deductions, and donations to registered pension plans and Post-Retirement Medical Funds, provided the employee declares them, provides the required paperwork, and stays within the legal limits. Additionally, it asked employers to deduct employee contributions and statutory levies. These include the Affordable Housing Levy and Social Health Insurance Fund contributions, in compliance with the Act. Kenyans going to work. Photo: Boniface Muthoni. Source: Getty Images According to the taxman, employers should identify and grant tax exemptions to workers who have legitimate tax exemption certificates, within the specified parameters. They should make sure that PAYE returns are submitted accurately and on time, taking into account any relevant exclusions, deductions, and reliefs. READ ALSO Kenya’s Ministry of Public Service announces 100 job vacancies for drivers
“Employees are advised to promptly provide their employers with all required documentation to support claims for deductions and reliefs, where applicable. What was KRA’s directive to landlords? Meanwhile, KRA implemented a new tax system to obtain more rental income tax from landlords and property owners nationwide. The new system was introduced after the government’s principal revenue collector lamented the poor rates of property and landlord tax collection in the country. The Electronic Rental Income Tax System (eRITS), which is mandated by law, will now enable property owners and landlords to pay taxes effectively. Chris Kiptoo, the Principal Secretary for Treasury, clarified that the new system represents a significant shift in the government’s endeavours to ensure a fair and efficient tax system that would foster the nation’s development. How much did KRA collect in the 2024/2025 FY? As earlier reported by TUKO.co.ke KRA exceeded its revenue target in the 2024/2025 fiscal year. During the period under review, the authority collected KSh 2.571 trillion against a target of KSh 2.555 trillion. KRA collected KSh 1.688 trillion versus a target of KSh 1.721 trillion, or a 98.1% performance rate in domestic revenues.
By Japhet Ruto
