The Kenya Revenue Authority (KRA) has clarified the applicability of insurance relief to Social Health Insurance Fund (SHIF) contributions.

In a statement on Friday, November 8, KRA noted that the Income Tax Act provides for insurance relief for a health policy whose term commences on or after the 1st January 2007 or a contribution made to the National Health Insurance Fund (NHIF).

The taxman further explained that the relief as provided refers to the NHIF under the National Health Insurance Fund Act, which was repealed by the Social Health Insurance Act.

Therefore, KRA disclosed that the relief does not apply to contributions made to the SHIF under the Social Health Insurance Act.

“The relief as provided refers to the NHIF under the National Health Insurance Fund Act, which was repealed by the Social Health Insurance Act.

“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 explained. 

However, the taxman noted that a bill has been fronted which proposes an amendment to the law to provide for a deduction of the SHIF contributions against taxable income.

“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,” KRA stated.

The clarification comes a month after the Social Health Authority (SHA) was rolled pit with employed Kenyans contributing 2.75 percent of their salaries to SHIF, a fund under SHA.

A few days ago, the National Treasury proposed tax ammendments that seek to deduct SHIF and housing levy contributions from employees’ gross salaries before they are subjected to taxation.