All employees in the public sector will be subjected to per diem tax, should the Finance Bill, 2023 be enacted into law.
In an interview with an economic and financial markets expert Ndiritu Muriithi (former Laikipia County Governor) the tax targets civil servants performing official duties.
“If you get a housing allowance, it is considered as a benefit, but per diem does not fall in such a category.
Should the Bill pass, per diem will be taxed as though it’s part of your salary,” said Muriithi.
Per diem refers to a fixed daily allowance an organization provides to employees or contract workers to cover business travel expenses.
The state will tax any travel allowances exceeding the standard rates approved by the Automobile Association of Kenya (AA).
“Notwithstanding the provisions of the sub-paragraph(ii), where an amount is received by an employee as payment of travelling allowance to perform official duties, the standard mileage rate approved by the Automobile Association of Kenya shall be deemed to be reimbursement of the amount so expended and shall be excluded in the calculation of the employee’s gains and profit,” the Finance Bill states.