The government directive to employers to start deducting the housing fund levy from salaries next month is illegal, the Federation of Kenya Employers has said.
FKE executive director Jacqueline Mugo on Tuesday said the organisation obtained a court order on April 8 suspending implementation of the tax until mention of the case on May 20.
The Housing levy is part of President Uhuru Kenyatta's Big Four agenda to build 500,000 affordable units in five years.
The Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works directed employers to deduct 1.5 per cent of staff salaries and remit them to KRA by May 9.
FKE said the directive is contrary to the court order which is still in force.
“The case will come up again for mention for further directions from the court on the hearing and determination of this case," Mugo said.
The housing fund levy was introduced under the Finance Bill 2018 which was approved by President Uhuru Kenyatta in September last year.
It would see a 1.5 per cent mandatory levy on a worker’s gross salary with a monthly maximum deduction of Sh2,500 for individuals earning a basic salary of Sh166,000 and above.
