Incorporating Kenya housing levy into your payroll

Incorporating Kenya housing levy into your payroll

We all know that taxation is an essential component of every business. Nonetheless, regardless of the size of your organisation and or investment in computing, managing taxes can be a daunting task. This is especially true when it comes to payroll taxes, which are intricate and carry serious legal implications.


Beginning 1st July 2023, the government of Kenya is mandated to collect Housing Levy, which must be remitted by the employer not later than nine working days after the end of each month. The housing levy is payable by the employee and employer at a rate of 1.5% of the employee’s gross monthly salary by the employee, and 1.5% of the employee’s monthly gross salary by the employer, as outlined in the Finance Act 2023.


Being a newly introduced tax with strict guidelines, there is the immediate need to align existing payroll systems with this new reality. Thanks to advancement in technology and the built-in foresight of Baraza Payroll System powered by DewCIS Solutions Ltd which has evolved to automate and streamline the process of incorporating newly introduced taxes including the Housing Levy deduction, remittance and reporting to ensure compliance with various tax regulations.


Considering that organisations have hundreds and thousands of records, an introduction of a new tax into the ecosystem would cause serious disruption, a riddle the solution to which would take several sleepless nights to solve. With Baraza Payroll, by simply defining a new Tax Category for Housing Levy and assigning the Rates for both employee and the employer contributions, the system will automatically calculate the correct tax amounts to be deducted from the payslip in addition to the other already existing tax obligations ensuring accuracy and compliance.


Needless to say that Baraza Payroll architecture was built with the reality that tax laws and rates are subject to change. Keeping track of these changes manually can be time-consuming and error-prone. Baraza Payroll system allows for updates to tax tables as an in-built service, ensuring businesses always use the latest rates for their calculations and a time-stamp of the previous tax regimes for reporting purposes.


We all know that year-end tax reporting can be stressful for both the employees and the employers alike. What with the strict timeframe requirements for statutory Forms including P9 and P10, and now faced with newly introduced Housing Levy. Baraza Payroll simplifies this process by automatically generating these requisite Forms, which can then be printed or electronically filed with the Kenya Revenue Authority (KRA).


Proper record keeping is vital not only for auditing purposes but most important, for potential reviews by KRA and in litigation where needed. Baraza Payroll assists organisations maintain detailed records of all transactions, ensuring easy retrieval and verification of any tax-related information.


Baraza Payroll system comes with built-in integration points to allow for seamless integration with accounting systems. This feature enables payroll tax-related transactions to be automatically reflected in your core accounting system, ensuring consistency and reducing the chances of errors due to manual data entry.


Another key feature of Baraza Payroll system is compliance alerts. These critical scheduled notifications are very handy because they warn of impending tax-related deadlines such as the nine-working days for remitting the Housing Levy deductions by the employer so as to remain compliant with the law.


Navigating the intricacies of taxation is a challenging aspect of running an organisation. Baraza Payroll software acts as a trusted ally; assisting organisations automate, simplify, and ensure accuracy in all tax-related obligations. Investing in Baraza Payroll system not only eases the taxation process but also secures compliance, giving both staff and employers a peace of mind and freeing up their time to focus on growth and other critical aspects of their operations.