• Social Health Authority (SHA) said the Social Health Insurance Fund (SHIF) deductions are subject to insurance relief but referred the matter to the Kenya Revenue Authority (KRA)
• KRA declared that the current 15% tax relief only applied to the defunct National Health Insurance Fund (NHIF)
• According to Tax Partner at PKF Patrick Kuria, Kenyans will not enjoy insurance relief until tax laws are amended

TUKO.co.ke journalist Wycliffe Musalia has over five years of experience in financial, business, and technology reporting and offers deep insights into Kenyan and global economic trends.

Kenya Revenue Authority (KRA) has clarified the tax relief application for the new Social Health Insurance Fund (SHIF) deductions.

What KRA said about tax relief on SHIF deductions

KRA said the 15% insurance relief applies only to the defunct National Hospital Insurance Fund (NHIF) payments made under the old Income Tax Act.

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The authority noted that the Tax Laws (Amendment) Bill, 2024 proposed changes that aim to allow deductions for contributions to the Social Health Insurance Fund (SHIF) against taxable income.

“The relief as currently provided under the Income Tax Act does not apply to contributions made to the SHIF under the Social Health Insurance Act,” said KRA.

What KRA’s tax relief directives on SHIF mean for Kenyans

Speaking exclusively to TUKO.co.ke, Tax Partner at PKF Patrick Kuria noted that KRA’s decision is based on the current provisions in the tax laws, which only apply to the defunct NHIF contributions.

Kuria noted that the transition from NHIF to the Social Health Authority (SHA) did not take care of the insurance relief under the new scheme.

“If it is not NHIF deductions, then the insurance does not technically apply to the new SHIF contributions unless changes are made to the tax laws.

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“Kenyans will not get the tax relief on their SHIF deductions until the Tax Laws (Amendment) Bill 2024, which proposes changes to allow SHIF contribution, becomes law,” Kuria explained.

What SHA said about tax relief

In October 2024, the government transitioned NHIF to SHA, the authority that implemented and ran the SHIF.

SHA clarified that SHIF contributions qualify for insurance relief. However, directions had to come from KRA.

“Our view is that contributors to the SHIF should qualify for insurance relief, but we advise that you get in touch with KRA for concurrence on this,” said SHA.

How much do Kenyans contribute to SHIF monthly?

Employed Kenyans are mandated to contribute 2.75% of their monthly gross salaries to the Social Health Insurance Fund.

Individuals with a gross salary of KSh 100,000 will contribute KSh 2,750 per month, or KSh 33,000 annually, while those earning KSh 35,000 will be deducted KSh 963

The highest monthly NHIF premium for individuals making KSh 100,000 or more was KSh 1,700, while the lowest premium was KSh 150.

Source: TUKO.co.ke