The Kenya Revenue Authority (KRA) is set to freeze bank accounts and deactivate the PINs of Kenyans who fail to remit the Affordable Housing Levy.
According to the Authority, the renewed crackdown is expected to target both salaried and non-salaried taxpayers, particularly those in the informal sector, where compliance levels have remained lower than in formal employment.
Introduced under the Affordable Housing Act, 2024, the Affordable Housing Levy requires employees to contribute 1.5 percent of their gross monthly salary, with employers matching the contribution.
Individuals earning income outside formal employment must also remit 1.5 percent of their gross income.
KRA has emphasized that failure to remit the levy will also attract a penalty equivalent to 3% of the unpaid funds.
“Any person who fails to comply with the law shall be liable to payment of a penalty equivalent to three per cent (3%) of the unpaid funds for every month if the same remains unpaid,” the authority explained.
New Enforcement Powers for KRA
The government’s ability to pursue levy defaulters is governed by the amendments made through the Finance Act, 2026.
The changes allow KRA to recover unpaid fees, levies, and charges using the same enforcement mechanisms available for tax debts.
To recover unpaid levies, the authority has the power to deploy measures including agency notices to banks, recovery proceedings, and asset attachment under section 42 of the Tax Procedures Act.
Additionally, PIN deactivation will be among the penalties against individuals and businesses that fail to meet their obligations.
Housing officials have emphasized that levy collection remains critical in funding the government’s affordable housing program.
According to Affordable Housing Board Acting Chief Executive Sheila Waweru, compliance from the informal sector has been gradual, although some traders have already begun contributing.
Field officers and revenue enforcement teams would ensure compliance and record all eligible contributors in the tax system, according to Affordable Housing Board Acting Chief Executive Sheila Waweru.
Penalties Await Defaulters
Beyond possible bank account restrictions and PIN deactivation, taxpayers who fail to pay the levy face financial penalties.
The Affordable Housing Act imposes a penalty equivalent to 3 percent of the unpaid amount for each month, or part of a month, that the levy remains outstanding.
All employers must remit deductions and matching contributions by the ninth working day after the end of the month.
The deadline to remit the levy is also applicable to individuals earning non-employment income.
Government data shows the levy generated more than Sh54 billion during its first year, making it one of the key funding streams for President William Ruto’s affordable housing agenda.
The administration has set a target of constructing 250,000 housing units annually, with thousands already completed and on sale across the country.
How Kenyans Can Pay the Housing Levy
Employers must file the monthly PAYE return through iTax and declare Affordable Housing Levy deductions under the designated housing levy section. Employers must deduct 1.5 percent of an employee’s gross salary and contribute an additional 1.5 percent before filing the return.
After filing, employers must generate a payment slip under the tax head “Agency Revenue” and tax sub-head “Housing Levy”.Payments can then be made through KRA-appointed banks, eCitizen payment channels, mobile money platforms, debit cards, or credit cards.
On the other hand, individuals and businesses that are not employers but earn income are also required to log into their iTax accounts, register a payment under the Housing Levy category, indicate the applicable tax period, and generate a payment slip before making the payment.
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