The Ministry of Health has assured citizens that the Social Health Authority deductions remain in force and legal as per the law.

In a statement, Health Cabinet Secretary Aden Duale said the 2.75 percent contribution is still in effect.

“We wish to reassure all Kenyans and our institutional partners that the 2.75 per cent contribution remains legally in force and is now recognised as tax-deductible under the Tax Laws (Amendment) Act, 2024,” stated Duale.

He added, “SHA continues to operate within the legal framework provided by the Universal Health Coverage laws”.

The Ministry acknowledged the High Court ruling on Monday, which declared the deductions from the gross income illegal, citing that it amounts to double taxation, hence violating income tax laws.

According to Duale, the petition had challenged the transition of data from the National Health Insurance Fund (NHIF) to SHA, as well as the statutory 2.75 per cent contribution to the Social Health Insurance Fund (SH1F). 

“The Court, recognising that the core issues raised in the petition are already under active consideration by the Court of Appeal, declined to issue any orders and struck out the petition,” he added.

In the Monday ruling, the High Court had singled out the concerns of salaried workers contributing to the Social Health Insurance Fund (SHIF)

In his judgment, Justice Chacha Mwita said that the 2.75 per cent deduction from gross income is double taxation and, therefore, illegal.

Judge Mwita ruled that the law clearly states that only income tax is withheld from gross income; therefore, no other deductions can be made from an employee’s total earnings.

He asserted that any further deductions, after the payment of income tax, introduce an unlawful and harmful component that constitutes double taxation.

“There can be no other gross income from which the person can again contribute 2.75 per cent to the Fund under SHIA and the regulations made thereunder. Any subsequent or other statutory eduction(s) based on the person’s gross income after income tax, is undoubtedly double taxation, charge or levy because the same gross income will have been taxed more than once under the Income Tax Act and the regulations made under SHIA as contribution to the Fund,” said Justice Mwita.

The judge, however, declined to issue any order after finding there was a separate case before the Court of Appeal.