Health Cabinet Secretary Aden Duale has defended the two.75% deductions beneath the Social Health Insurance Fund (SHIF), clarifying that they’re legally grounded in a regulation signed by President William Ruto in December 2024.
In an announcement on Monday, June 23, the Health CS acknowledged that the authorized basis for the deductions is the Tax Laws (Amendment) Act, 2024.
He defined that the Act formally categorized the SHIF contribution as tax-deductible, cementing its place in Kenya’s well being financing system.
Therefore, the CS acknowledged that SHIF deductions stay legally in impact and are central to the federal government’s Universal Health Coverage (UHC) plan.
“The 2.75% contribution stays legally in drive and is now acknowledged as tax-deductible beneath the Tax Laws (Amendment) Act. 2024,” acknowledged Duale.
SHA, the successor of NHIF, operates beneath a brand new authorized framework which incorporates the Social Health Insurance Act, the Digital Health Act, and the Primary Health Care Act.
“SHA continues to function inside the authorized framework supplied by the Universal Health Coverage legal guidelines, the Social Health Insurance Act, the Digital Health Act, and the Primary Health Care Act,
“All of that are designed to uphold fairness, monetary safety, and entry to high quality well being companies for all Kenyans,” he added.
Duale Responds to High Court Judge on legality of SHIF Deductions
Duale’s assertion is available in response to a latest High Court judgment by Justice Chacha Mwita, which described the deductions as illegal and a type of double taxation.
In his ruling on Petition E524 of 2024, the decide held that deducting 2.75% from an individual’s gross revenue, after revenue tax has already been utilized, contravenes established tax ideas and violates the regulation.
“By offering that an individual contributes 2.75% of his/her gross revenue to the Fund after paying revenue tax from the identical gross revenue, the regulation introduces a destructive factor of taxation, which is double taxation and would, consequently, make such a regulation illegal,” stated Justice Mwita.
He defined that gross revenue ought to solely be subjected to revenue tax beneath the Income Tax Act, and that any further deduction, reminiscent of SHIF, from the identical revenue quantities to taxing staff twice.
The petition, filed by 4 medical docs, additionally challenged the transition of knowledge from the now-defunct National Health Insurance Fund (NHIF) to the Social Health Authority (SHA).
The petitioners argued that deductions from already-taxed revenue infringed on the constitutional proper to non-public property.
However, Justice Mwita famous {that a} associated Petition E513 of 2024 is already energetic within the Court of Appeal. As a end result, the High Court struck out the petition with out issuing any formal orders.
