NAIROBI, Kenya – The Kenya Revenue Authority (KRA) has received expanded powers to pursue Kenyans, employers and businesses that fail to remit the Affordable Housing Levy, with defaulters facing bank account restrictions, asset recovery and deactivation of their tax identification numbers.
The tougher enforcement regime took effect on July 1, 2026, following changes introduced through the Finance Act 2026.
The changes bring unpaid housing levy obligations under the tax recovery framework, allowing KRA to use enforcement mechanisms available for other tax debts.
The move is expected to intensify the taxman’s efforts to recover unpaid housing levy contributions as the authority seeks to improve compliance across both the formal and informal economies.
Under the tax recovery framework, KRA can issue notices to third parties, including financial institutions, to recover money owed by a taxpayer. This means that where a housing levy liability qualifies as an enforceable tax debt, funds held in a defaulter’s bank account can be targeted for recovery.
KRA can also pursue other assets belonging to a taxpayer who fails to settle an outstanding liability. The expanded powers therefore move the Affordable Housing Levy beyond a simple monthly statutory deduction and give KRA stronger tools to enforce payment.
However, the measures apply to defaulters with outstanding liabilities and should not be interpreted to mean that KRA will automatically freeze every Kenyan’s bank account after a missed payment.
Housing levy defaulters could also face KRA PIN deactivation, potentially creating difficulties for people and businesses that depend on their tax PINs for commercial and government transactions.
The measure forms part of the broader enforcement approach aimed at compelling taxpayers to clear outstanding obligations rather than allowing unpaid levies to accumulate.
KRA has increasingly relied on digital records and data matching to identify taxpayers who fail to meet their obligations.
The Affordable Housing Levy applies to employees and employers, while people earning income outside formal employment are also covered under the Affordable Housing Act.
The levy stands at 1.5 per cent of an employee’s gross salary, with the employer contributing a matching 1.5 per cent. For people whose income is not subject to the employment-based levy, the law provides for a 1.5 per cent levy on gross income.
The levy must generally be remitted by the ninth working day after the end of the month in which the relevant salary or income was due or received.
KRA has previously clarified that the employee contribution applies across employment contracts, while employers must deduct and remit the employee’s contribution together with their own matching amount.
The enforcement drive will also target employers that collect statutory deductions from workers but fail to remit the money to KRA. An internal audit identified 6,390 companies that were remitting PAYE but had failed to remit the corresponding housing levy.
Such employers could now face aggressive recovery measures as KRA expands its compliance checks. The authority is also expected to scrutinise businesses in the informal sector, including enterprises that employ workers but fail to meet their housing levy obligations.
KRA’s enforcement campaign extends to the informal economy, where businesses and self-employed Kenyans can have less straightforward income records. The authority is deploying revenue officers to strengthen compliance checks and compare business information with tax records.
For self-employed and other non-salaried earners, the Affordable Housing Act provides for the levy on gross income where the income does not already fall under the employee contribution framework.
Defaulters can face a 3 per cent penalty on the outstanding amount for every month or part of a month that the liability remains unpaid.
This means that taxpayers who allow arrears to accumulate could see their liabilities increase significantly over time.
The government’s housing programme uses the levy to support the development of affordable housing and related social and physical infrastructure.
