Tax free employment benefits
There are some components of remuneration packages that are specifically not taxable on employees. These are:
- home travel expenses provided by an employer to expatriates;
- Amounts paid by employer as contributions to pensions and provident funds schemes, but excludes employees serving tax exempt employers.
- educational fees paid for employee’s dependants and relatives provided that such amounts are disallowed on the employer’s tax computations and tax is paid thereon;
- medical services and medical insurance for full time employees (subject to a Khs 1. million limit for directors holding more than 5% of company’s shares);
- benefits whose accumulative value does not exceed Shs 3,000 per month.
- Employer canteen meals not exceeding Ksh 4,000 per month (Ksh 48,000 per annum)
- Fringe benefit tax.
- Monthly pension withdrawals not exceeding Ksh 15,000
- Full pensions paid to senior citizens (over 65 years)
- First Ksh 150,000 per month for the disabled.
- Effective July 2016, Bonuses, overtime and retirement benefits paid to employees whose income does not exceed the lowest tax band (currently Kshs 11,180 previously Kshs 10,164) are tax free.
Tax rates (monthly)
With effect from January 2017 the monthly PAYE rates are as below:
On the first shs, 11,180 .…...... 10%
On the next shs, 10,534 ......... 15%
On the next shs, 10,534 ......... 20%
On the next shs,10,534 .......... 25%
On income over shs 42,781 ....... 30%
With effect from January 2018 the monthly PAYE rates are as below:
On the first shs, 12,298 .…...... 10%
On the next shs, 11,588 ......... 15%
On the next shs, 11,588 ......... 20%
On the next shs, 11,588.......... 25%
On income over shs 47,062 ....... 30%