Senior advisor in President William Ruto’s Council of Economic Advisors (CEA) Moses Kuria has assured that contributions to the Social Health Insurance Fund (SHIF) will soon be entitled to tax relief.

In a statement on Friday, November 8, 2024, Kuria noted that the confusion in the rollout of the new Universal Health Coverage (UHC) was a storm in a teacup.

“The confusion on the tax relief for SHA contributions is a storm in a teacup. The Current Income Tax Act recognises NHIF and not SHIF. There is an amendment on the floor of the House to cure that. Once parliament fixes that SHIF contributions will enjoy the same relief as NHIF contributions. No employer will be penalised,” Kuria said.

Tax relief

According to the Finance Act of 2021, Section 31(1) of the Income Tax Act (ITA), Cap 470 was amended to include contributions from the defunct National Hospital Insurance Fund (NHIF).

According to the law, the Kenya Revenue Authority (KRA) would refund up to 15 per cent of the total annual contributions up to Ksh60,000.

KRA noted that the NHIF contributions were initially to be added to the Insurance premiums. However, the relief was capped at Ksh5,000 per month.

KRA weighs in

In a statement on Friday, November 8, 2024, KRA noted that with the current SHA, which is a month old, there was a Bill on the floor of the house which sought to amend the Income Tax Act to include contributions from SHIF to be eligible for tax relief.

“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,” KRA said.

Adding: “The Tax Laws (Amendment) Bill, 2024 has proposed an amendment to the law to provide for a deduction of the SHIF contributions against taxable income.”

If the bill is passed in Parliament, Kenyans will be able to get back some of their money from the tax body in terms of tax relief.

Currently, SHA contributions are set at 2.75 of gross pay for salaried workers, with the minimum contribution being Ksh300.