Employers have been urged to remit Pay as You Earn (PAYE) contributions for all employees with or without Personal Identification Number (PIN).
This comes after the Kenya Revenue Authority (KRA) flagged 1,058 companies and individuals in June this year for suspected tax evasion amounting to Sh132 billion in the 11 months through May 2021, more than fourfold the decade-long annual average.
According to Senior Manager, Employment Taxes Kennedy Kyalo during a webinar meeting hosted by PricewaterhouseCoopers (PwC) who said employers should do a follow up with workers without PINS upon completion of filling partial returns.
“The payment for all the employees should be done using the employer’s PIN and when filling the return then you can do a partial return to including the employees with PINS only.
Once submitted, follow up with employees without PINS to ensure they have PINS and once obtained go back and amend your returns,” said Kyalo.
In the meeting, themed “Navigating through Tax Matters in the Manufacturing Sector” Kyalo noted that employment income is subject to income tax which is applied via the PAYE system.
With manufacturing playing a crucial role in Kenya’s economic development serving both the local and international markets, the experts have discussed key Indirect Taxes, Value Added Tax, and Customs among other factors ailing the sector.
According to the taxman, an employer is required to deduct PAYE from their employees’ salaries and wages at the prevailing rates and remit the same to the Authority on or before the 9th of the following month.
Incomes that are not chargeable to PAYE include employment income less than Ksh.24,000 per month, Earnings not exceeding Kshs. 150,000 per month for a person with a disability having a valid tax exemption certificate and Medical cover provided to all employees.
Others are the Monthly pension Income of persons aged 65 years and above, Pension Contribution made by employer and Meals provided by employer whose total value does not exceed Ksh.4,000 per month (48,000 in a year) among others.
Fringe Benefits Tax (FBT), Non-Cash Benefit above 3,000 monthly such as airtime, Car Benefit and Value of Premises provided by Employer are chargeable as PAYE.
Also Read:
- KRA bags Ksh.2 billion from voluntary taxpayer disclosures
- Metropol CRB pilots credit rating as loaning reference
- Why lenders, borrowers should take advantage of CRB ratings
upon the advent of the coronavirus pandemic, the Kenyan government shed Ksh.62.1 billion in earnings from PAYE with the tax head being the worst hit by COVID-19 related disruptions.
According to a new analysis on revenue collection across twelve months to the end of January this year by the National Treasury, the plunge in PAYE earnings represents 44.5 percent of the total plunge in ordinary revenues for the period, tabulated at Ksh.139.5 billion.
Total PAYE collections during the period amounted to Ksh.179.2 billion from a higher Ksh.241.3 billion at the same time last year.
The slump in collections from salaried Kenyans is largely attributable to deductions on the rate of VAT in April last year where the maximum rate of PAYE fell to 25 from 30 percent as part of government’s measure to cushion Kenyans from harsh economic effects caused by COVID-19.
Manufacturing, according to the Economic Survey 2021, shed 10 percent of its jobs last year. It is the second-largest employer after agriculture.
Manufacturing employed 353,300 people in 2019, but this had reduced to 316,900 by the end of 2020, according to the Economic Survey.
