KRA Gains Enhanced Powers to Crack Down on Housing Levy Defaulters, Threatens Asset Seizures

Workers , traders , and employers will have to watch out for their bank accounts getting frozen, their assets getting seized & their PIN being deactivated as the Kenya Revenue Authority (KRA) gears up to launch a full scale crackdown on people in Kenya who haven't paid their housing levy.

New Enforcement Powers

Things changed with an amendment to the law back on July 1 which lets KRA crack down on people who havent paid their levies , using the same tough methods that were previously only used on tax cheats and people who dont pay their taxes on time.

KRA has been collecting a levy worth 1.5% of people's pay or income since July 2024 but until now they just didnt have the power to chase after people who owed it - so thousands of workers & businesses were basically evading payment altogether.

Closing the Legal Loophole

The Finance Act 2026 gave KRA new powers to collect housing levies, and it's worth noting that they have managed to collect Sh79.9 billion in the year leading up to June. Housing Principal Secretary Charles Hinga basically said the government is expecting KRA to be able to do a lot more now that they have this new power.

"KRA said they needed this specific power to go after employers who take the levy from workers but then just pocket it & dont give it to the government" Hinga said. And that seems to be a clear signal from the ministry that they're going to be coming down on people who dont pay up.

Widespread Non-Compliance Turns Up

An audit of the Affordable Housing Fund showed that thousands of people were paying their taxes but havent been sending in the housing levy. And not surprisingly it turned out that the informal sector had some of the worst compliance rates - with corner shops , beauty salons , bars & other small businesses not bothering to send in the levies that they collect from their workers.

The Auditor-General found that 6,390 companies are sending in Pay-As-You-Earn (PAYE) tax but they havent been sending in the housing levy.

Reconciliation & Recovery - The Plan

Hinga said KRA was going to go over all the numbers internally to figure out who owes what & then they'll do what they need to do to get the money back. "They are now able to go after the people who havent paid , do an assessment , figure out if they owe money & then sort it out internally" he said.

Tax Background & Court Battles

The housing levy was introduced in 2024 to help pay for affordable housing scheme designed for low-income people but it was a real sore point for a lot of Kenyans who felt like they were getting hit with too many new taxes. There were some worries that this was unfair on people in the informal sector who werent paying the tax - so the High Court actually suspended collections for a few months - saying it was unconstitutional.

Parliament had to step in & pass the Affordable Housing Act to sort that out & let collections start up again from March 2024.

KRA Just Got a Lot More Power

The Finance Act 2026 introduced a new law that basically lets the KRA do the same things to people who dont pay their housing levies as they would to people who dont pay their taxes - like freezing their bank account & seizing their assets.

KRA can use all the same tools that they use to get after tax dodgers to get after housing levy dodgers - thanks to a new law that lets them treat housing levies as though they were unpaid taxes.

The Stick

This means KRA can now send in a third party like a bank to get some money that a defaulter owes - using what is refered to as a garnishee order.