This clarification seeks to guide citizens on
contributions made to the newly introduced Social Health Insurance Fund (SHIF)
and how these contributions impact their tax relief status.
KRA highlighted that under the Income Tax Act, relief has traditionally been available for health policies starting from January 1, 2007 as well as for contributions made to the National Health Insurance Fund (NHIF).
However, with the enactment of the Social Health Insurance Act, this has changed.
"The relief as provided refers to the NHIF under the National Health Insurance Fund Act, which was repealed by the Social Health Insurance Act," KRA stated in a notice on Friday.
As such, KRA says contributions made to the SHIF are currently not eligible for tax relief under the Income Tax Act.
"The relief as currently provided under the Income Tax Act does not apply to contributions made to the SHIF under the Social Health Insurance Act," KRA added.
KRA said the Tax Laws (Amendment) Bill of 2024 has proposed changes that could allow for a deduction of SHIF contributions against taxable income.
This potential amendment, if passed, would benefit citizens by making their contributions to the SHIF tax-deductible, similar to previous arrangements under the NHIF.
The shift from the National Health Insurance Fund (NHIF) to the Social Health Insurance Fund (SHIF) took place with the enactment of the Social Health Insurance Act.
This new law repealed the NHIF Act and introduced SHIF as part of Kenya’s ongoing reforms to improve healthcare accessibility and quality.
The Social Health Insurance Act effectively replaced NHIF with SHIF, restructuring contributions and benefits to address the shortcomings of the older system and align with the government’s UHC goals.