CS Duale Clarifies SHIF Deductions as Govt Cracks the Whip on 12,900 Employers

Hello and welcome to the Money News Roundup Newsletter. Today, we explain the government’s clarification on the 2.75% SHIF contributions after a recent court ruling. We also break down the government’s statement on whether Hustler Fund defaulters will be blocked from using SHA services and 12,900 Nairobi employers who defaulted on SHA remission.

‍Duale Clarifies on 2.75% SHIF Deductions

Health Cabinet Secretary Aden Duale has maintained that the 2.75% SHIF deduction remains in force despite pronouncements made by Justice Chacha Mwita in a ruling on Monday.

As reported by Citizen Digital, Justice Mwita had expressed that the SHIF deductions were unlawful, given that the contributions were pegged on the gross salary or income of Kenyans.

According to the judge, Kenyans already face income tax, which is calculated on the gross pay; therefore, calculating the SHIF deductions on gross pay amounts to double taxation.

However, the judge threw out the petition, explaining that similar cases were being heard in the Court of Appeal.

Therefore, given that the judge opted to strike out the petition, Duale stated that the deductions would go on until the remaining petitions are determined.

"The Court, recognizing that the core issues raised in the petition are already under active consideration by the Court of Appeal, declined to issue any orders and struck out the petition," read the statement in part

"We wish to reassure all Kenyans and our institutional partners that the 2.75% contribution remains legally in force and is now recognized as tax-deductible under the Tax Laws (Amendment) Act, 2024."

‍Duale Addresses Reports of Denying SHA Services to Hustler Fund Defaulters

Meanwhile, the CS refuted claims that the government would deny SHA services to Kenyans who had defaulted on their Hustler Fund Loans.

In a statement issued after remarks made by Government Spokesperson Isaac Mwaura, Duale, as reported by Kenyans.co.ke, stated that the SHA is not linked to the Hustler Fund programme.

"If you took a Hustler Fund loan and defaulted, we will make arrangements to ensure that you don't get Social Health Authority (SHA) benefits because you must pay your loan; a total of Ksh6 billion in defaulted loans is a lot of money," Mwaura stated.

"The information is inaccurate. All Kenyans have a right to access Social Health Authority (SHA) services regardless of their engagement with the Hustler Fund," the CS clarified.

Gov’t Targets 12,900 Nairobi Employers Over Ksh3B Health Deductions

The Ministry of Health has flagged over 12,900 Nairobi-based employers for failing to remit mandatory 2.75% health deductions under the new Social Health Authority (SHA), with unpaid dues exceeding Ksh3 billion. A report by Capital FM indicated that the government is targeting recovery of over Ksh21 billion from non-compliant firms.

Medical Services PS Dr. Ouma Oluga, speaking at the launch of the SHA Rapid Results Compliance Initiative, warned that employers must remit the deductions or face enforcement. He also announced flexible options like Lipa SHA Pole Pole to support informal sector workers, adding that the campaign will soon roll out to Kiambu, Kajiado, and other counties.

So far, over 24 million Kenyans have enrolled in SHA, marking major progress toward achieving universal health coverage.

Govt to Raise Ksh129 Billion for Affordable Houses Through NSE

As reported by the Business Daily, the government is seeking to raise Ksh129 billion for the Affordable Housing Program through the Nairobi Securities Exchange (NSE)

Housing PS Charles Hinga stated that the funding would be sourced through the NSE using Sukuk bonds and the Real Estate Investment Trusts (REITs)

He explained that the move was vital given that the current money raised through the Affordable Housing Levy cannot help the government meet its target of 200,000 houses per year.

Currently, the government collects close to Ksh79 billion annually through the levy.

“We need about Ksh400 billion a year to meet our target of 200,000 units every year. The Affordable Housing Levy brings in about Ksh72 billion annually at most. So we have quite a huge gap,” he stated.

“We’re looking at going to the market next year and raising about $1 billion (Ksh129 billion) through a Sukuk bond and Reits listed on the Nairobi Securities Exchange.”

Car Importers Sue KRA Over New Tax Formula 

The Car Importers Association of Kenya (CIAK) has sued the Kenya Revenue Authority (KRA) in a push to halt the implementation of the Current Retail Selling Price (CRSP), which is to take effect on July 1.

As reported in the Standard, the car dealers, in their petition, argued that the new list was discriminatory. They explained that the move was going to hurt most Kenyans who plan to own vehicles.

According to CIAK, some of the most used vehicles will increase by 145 per cent. The affected vehicles include the Mazda Demio and the Toyota Vitz models.

Following the filing of the case, Justice Jairus Ngaah of the Mombasa High Court certified the petition as urgent and directed the petitioners to serve KRA within the next 7 days.

“I have read the applicant’s application dated June 20 this year, filed under certificate of urgency. I hereby certify the application as urgent and direct that the same, together with the petition, be served forthwith to the respondents,” the judge directed.

KURA Gets Nod on Ksh7.6 Billion BRT Project

The Kenya Urban Roads Authority (Kura) has been cleared to proceed with the Ksh7.6 billion Bus Rapid Transit (BRT) project along Nairobi’s Outer Ring Road after a legal challenge was dismissed.

The project aims to ease traffic congestion in the city.

The Business Daily reported that a consortium led by CK Solution Co. Ltd had challenged the tender, claiming the process was biased towards South Korean firms. The project is funded by Korea’s Export-Import Bank under strict financing terms.

The Procurement Administrative Review Board ruled that Korean law governs the procurement, overriding Kenyan procurement regulations