The money is a saving and was not taxed initially- PS Hinga gives more details on housing levy withdrawal.
Speaking at a media station, Housing principal secretary Hinga, explained what happens when someone opts to withdraw their housing fund money after 7 years.
He outlined that upon withdrawal, then money will be taxed, becausw during the seven years, the money was deemed as a saving.
He stated,”The money is a saving and was not taxed initially. If you could have earned the money, you would have paid tax. That means for the seven years, you did not pay the tax.”
” The money is aimed at addressing the issue of housing and unemployment,” he added.
He however, outlined that to evade taxation, the money could be moved to a pension scheme of whichever liking.
He stated,”What we are saying is that you can take the money and move it to the retirement fund. That will not be taxed.”
When asked whether employees would also receive the 3 per cent topped up by their employers, PS Hinga stated that the employers’ contributions would still stay in the fund for a longer period.
“In the draft regulations, it stipulates that Kenyans will get the 3 per cent they contribute. However employers pay for the other 3 per cent. which will remain in the Housing Fund for 14 years .”
PS Hinga maintained that the housing fund is not a tax, but a saving where people who contributed will be able to own houses under the scheme.