The law provides that an employer should deduct an amount from an employee’s salary to pay for their statutory deductions in accordance with the time period and the other necessary requirements. In Kenya, Statutory deductions include Income-tax (PAYE), NHIF, NSSF, which are remitted to different government institutions by the employer on a monthly basis.
Some employers have failed to adhere to this law, by taking advantage of loopholes in the system to evade taxes. But Kenya Revenue Authority has been working on a system that integrates all the statutory deductions into one platform to reduce the cost of compliance and curb tax revenue leakage.
In one of its initiative under the government’s ease of doing business agenda, Kenya Revenue Authority and National Security Fund (NSSF) have informed the public that the unified payroll return has been developed for joint declaration and payment of Pay As You Earn (PAYE) and NSSF deductions.
“The PAYE/NSSF unified payroll return which is ready for implementation will be piloted on select employers in the month of March 2020 prior to being fully rolled out. There is ongoing work to further incorporate a joint declaration of National Insurance Fund (NHIF) and payment of National Industrial Training Authority (NITA) levy, through the KRA iTax system. These declarations are aimed at reducing their compliance cost efforts and costs,” read a notice to the public.
Employers have been encouraged to support the system initiative by filling the unified payroll return available in the KRA iTax system. According to the authorities, the support structures have been enhanced in both institutions to ensure employers are optimally supported to comply with these reform initiative.
This integration is one of the tax authority’s national integration and monitoring strategies through the use of technology to facilitate this data-driven compliance approach.