KRA gains new powers to recover unpaid housing levy as enforcement looms
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The Kenya Revenue Authority can now pursue unpaid housing levy as though it were tax debt, after the Finance Act 2026 gave it explicit recovery powers, with more than Sh100 billion estimated unpaid or evaded.
The Kenya Revenue Authority (KRA) is expected to start a crackdown on housing levy defaulters after the Finance Act, 2026 gave the tax agency explicit legal powers to recover arrears and punish those in breach.
The Affordable Housing Fund has collected more than Sh200 billion since the levy was introduced, but estimates suggest more than Sh100 billion has either remained unpaid or been evaded. The new Section 39B of the Tax Procedures Act, effective July 1, empowers the KRA Commissioner-General to recover unpaid fees, levies and charges collected on behalf of government as though they were unpaid tax.
The levy requires employers to deduct 1.5 percent of an employee's gross monthly pay and remit it to the fund, with a matching 1.5 percent employer contribution, bringing the total to three percent of gross monthly earnings. Informal-sector workers, traders and other self-employed Kenyans pay 1.5 percent of gross income.
KRA's new tools include requiring third parties holding money for defaulters - such as banks, mobile money platforms or tenants - to pay it directly to the authority, seizing and selling movable property, freezing transaction accounts to prevent asset dissipation, and placing charges on land or other immovable property. Amounts not exceeding Sh100,000 can be recovered summarily without court proceedings.
Housing Principal Secretary Charles Hinga said KRA had sought clear legal authority before taking stronger action against defaulters, and can now assess, evaluate and prosecute taxpayers who failed to remit the levy. The Finance Act also raised KRA's potential allocation from levy collections to up to two percent, subject to National Treasury approval, from a previous ceiling of 0.5 percent.