How To Avoid Paying Fresh Tax Imposed On Refunds For Housing Fund- PS Hinga
He further noted that only Kenyans who contribute to the Housing Fund would own houses under the programme.
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Housing and Urban Development Principal Secretary (PS) Charles Hinga on Monday, May 29 revealed that Kenyans would be subjected to tax should they decide to withdraw their contribution from the Housing Fund after seven years.
Speaking during an interview on NTV, the PS explained that the withdrawal would be taxed eventually as the initial 3 per cent contribution will not be taxed during the salary deduction stage.
"The money is a saving and was not taxed initially. If you could have earned the money, you would have paid tax. That means for the seven years, you did not pay the tax.
"This money is aimed at addressing the issue of housing and unemployment," he explained.
He however noted that contributors can opt to transfer their seven-year contributions to their own pension schemes if they didn't want their money to be taxed.
"What we are saying is that you can take the money and move it to the retirement fund. That will not be taxed," he added.
Regarding Kenyans getting the other 3 per cent topped up by their employers, Hinga revealed that the employers' contributions would remain in the fund for a longer period.
"The draft regulations stipulate that Kenyans will get the 3 per cent they contribute. However, the employers pay for the other three per cent, which will remain in the Housing Fund for 14 years," Hinga noted.
He reiterated that the Housing Fund was not a tax but rather a saving, adding that the funds would help the government tackle the shortage of housing in the country.
He further noted that only Kenyans who contribute to the Housing Fund would own houses under the programme.
The National Housing Fund is a government initiative aimed at providing affordable housing to Kenyans. The fund requires all employees to contribute 3 per cent of their monthly salary and every employee who contributes 3 per cent, to their employer will also contribute 3 per cent to the housing kitty.
The maximum contribution for all Kenyans is set at a maximum of Ksh2,500. However, Kenyans working in the informal sector can make their contributions voluntarily.
The Housing Fund proposal in the Finance Bill 2023 has been subjected to uproar from a section of Kenyans arguing that it should not be a mandatory contribution but rather a voluntary contribution.
Houses in the Kings Serenity affordable houses project in Kajiado County commissioned by President William Ruto on October 18, 2022. /STATE HOUSE KENYA
