Introduction
The High Court, in Constitutional Petition Nos. E181 of 2023, declared sections 89 on Affordable Housing Levy (AHL) unconstitutional.
Further, In Civil Application No. E577 of 2023, the applicants, The National Assembly and The Speaker of the National Assembly, filed an appeal and Application for a stay against that decision before the Court of Appeal seeking a stay against the decision of the High Court. A temporary stay was granted, allowing the Housing Levy to continue being collected pending the determination of the Application for stay.
On 26th January 2024, the Court of Appeal issued a ruling on the Application, which sought a stay of the High Court ruling and to allow the Housing Levy to continue being collected. In its ruling, the Court dismissed the Applications, halting the collection/deduction of the housing Levy pending the full hearing of the appeal.
Implications
In light of the court order, the implementation of the housing levy remains on hold.
Employers are advised not to deduct the levy unless the Court of Appeal rules otherwise after hearing the substantive appeal, or in the alternative, the Court reverses the ruling delivered on 26th January 2024;
Please note:
On 31st January 2024, The Government appealed against the said ruling at the Supreme Court. However, until the Supreme Court issues new orders, the housing levy remains halted.
Moving forward, the employers and employees need to budget appropriately for the proposed Housing Levy contribution amounts in case the same is implemented.
Conclusion
The introduction of the AHL is a significant change to taxpayers’ payroll operations and tax compliance obligations. Notwithstanding the orders, taxpayers should keep in mind that the Courts have yet to issue their judgment on the substantive appeal seeking to stop the implementation of the Finance Act of 2023. Pending the final ruling, we advise taxpayers to keep a vigil on the new developments and comply with the new AHL provisions to avoid incurring any tax liabilities in the form of penalties and interest.