A statutory deduction is a mandatory deduction the employer has to take out of the employees paychecks.

In Kenya statutory deductions are a legal requirement where every employer must on behalf of the relevant bodies deduct from the employees salaries and remit the same to the Government through those bodies.

Basic statutory deductions in Kenya:

• P.A.Y.E TAX

It is a tax collected from gainful employment.

Gains or Profits includes: wages, casual wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, or subsistence, travelling, entertainment or other allowance received in respect of employment or services rendered.

PAYE is chargeable to persons of employment income of Kshs. 24,000 and above per month.

It should be filed and remitted on or before 9th of the following month failure to which

For late filing you get a 25% of the tax due or Kshs. 10,000. whichever is higher

For late payment: you are subject to a 5% of the tax due and a late payment of 1% per month on the unpaid tax until the tax is paid in full.

N.B – P.A.Y.E tax is only deducted by Companies and not Business Names

• N.H.I.F

This is a deduction made by the employer which caters for the employees medical matters.

It amount deductible is dependent on the prevailing rates.

It should be filed and remitted on or before 9th of every calendar month.

 

• N.S.S.F

Normally, the employer pays half and the employee pays the other half of the amount remitted.

Currently most of the employers are still using the old rates of Ksh.200 for both employer and employee.

It should be filed and remitted before 15th of every month.

 

Engage our team for management of the statutory deductions for your business.

We are here to keep you as compliant as possible.