The Legality of Taxing ‘Part-Time’ Employees in Kenya at a Flat Rate of 30%

Authors Wilfred N Konosi, Fred M Ratemo, Fred O Nyagaka

ISSN: 2521-2613
Affiliations: Kisii University, Kenya; None; None
Source: Africa Nazarene University Law Journal, 2017, Issue 1, p. 58 – 83


Taxes are an important aspect of the national economy and a vital source of public finance. The Kenyan Government has, through legislation, imposed various taxes and levies on its citizens and residents, including income tax, value-added tax, customs duty and excise duty. The Kenya Revenue Authority administers the various tax laws in Kenya and collects taxes on behalf of the national government. Regarding the taxation of employment income, Kenya’s Income Tax Act, Chapter 470 of the Laws of Kenya, does not distinguish between employees who work full-time and those who work part-time. In most cases employers categorise employees as being part-time for their own convenience. This categorisation has tax implications for the affected employees. The tax implication, as a result of the differentiation between full-time and part-time employees, is that part-time employees pay more tax on their earnings when compared to their full-time counterparts. The usual practice for the assessment and collection of income tax in Kenya is that employers withhold income tax on the earnings of part-time employees at a flat rate of 30% and remit the same to the Kenya Revenue Authority. This mode of taxation is based on a directive by the Kenya Revenue Authority which has no constitutional or statutory basis. This is not only illegal, but also discriminatory as it denies part-time employees the right to equal remuneration for equal work. This practice is in conflict with the constitutional prescription that Kenya’s public finance system shall promote an equitable society where the burdens of taxation are distributed fairly and the costs and benefits of the utilisation of resources and public borrowing are shared equitably between present and future generations.