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Tax Rates

PAYE, Fringe Benefit Tax, NHIF and NSSF parameters for 2014.

PAYE

PAYE rates in effect from 1st January 2005:

Monthly Taxable Pay (Ksh) Annual Taxable Pay (Ksh) Rate of Tax (%)
Up to 10,164 Up to 121,968 10
10,165 - 19,740 121,969 - 236,880 15
19,741 - 29,316 236,881 - 351,792 20
29,317 - 38,892 351,793 - 466,704 25
Above 38,892 Above 466,704 30

Other PAYE parameters:

  Monthly Limit (Ksh) Annual Limit (Ksh) Effective Since
Personal Relief 1,162 13,944 1st January 2005
Insurance Relief 5,000 60,000 1st January 2007
Allowable Pension Fund Contribution 20,000 240,000 1st January 2006
Allowable HOSP Contribution 4,000 48,000 1st January 1999
Owner Occupier Interest 12,500 150,000 1st January 2006

Fringe Benefit Tax

The employer is required to pay fringe benefit tax on any loans advanced to employees at an interest rate below the prevailing market interest rate. This applies to all loans issued after 11 June 1998, and to those issued on or before 11 June 1998 but whose terms and conditions have changed after this date.

For 2014 the market interest rates published by KRA are as follows:

Quarter Interest
Rate (%)
January to March 10
April to June 9
July to September 9
October to December -

NHIF

NHIF rates in effect from 1 April 2012 (suspended due to ongoing court case):

Gross Pay (Ksh) Deduction (Ksh)
Up to 5,999 150
6,000 - 7,999 300
8,000 - 11,999 400
12,000 - 14,999 500
15,000 - 19,999 600
20,000 - 24,999 750
25,000 - 29,999 850
30,000 - 49,999 1,000
50,000 - 99,999 1,500
100,000 and above 2,000

NHIF rates in effect up to 31 March 2012:

Gross Pay (Ksh) Deduction (Ksh)   Gross Pay (Ksh) Deduction (Ksh)
Up to 999 0   8,000 - 8,999 180
1,000 - 1,499 30   9,000 - 9,999 200
1,500 - 1,999 40   10,000 - 10,999 220
2,000 - 2,999 60   11,000 - 11,999 240
3,000 - 3,999 80   12,000 - 12,999 260
4,000 - 4,999 100   13,000 - 13,999 280
5,000 - 5,999 120   14,000 - 14,999 300
6,000 - 6,999 140   Above 14,999 320
7,000 - 7,999 160      

NSSF

New Rates

The new NSSF Act came into effect on 10th January 2014. Under this act contributions to NSSF are divided into two tiers. To start with, both Tier I and Tier II contributions must be paid to the NSSF but there is a procedure for opting out of the latter.

The employee and employer each contribute 6% of pensionable pay to NSSF subject to certain limits for each tier. These limits will change each year. For the first year they are as follows:

Tier Pensionable Pay
I Up to 6,000
II 6,001 - 18,000

The effective date of the new NSSF rates remains uncertain due to ongoing litigation.

Old Rates

Under the old NSSF Act, the employee and the employer contributed 5% of gross pay each. The combined employee and employer contribution for each pay period was subject to the following limits:

Pay
Frequency
Maximum
Contribution
(Ksh)
Monthly 400
Biweekly 200
Weekly 100