When the NITA levy starts and stops
When a new Kenyan employer must register for the training levy, the twelve-month exemption for small new employers, and telling NITA when hiring stops.
By Achekam · · 4 min read · For Running a business businesses in Kenya
Most of the attention on the NITA training levy goes to paying it. The rules that catch businesses out are at the edges: the day a business takes on its first employee, and the day it stops employing anyone, whether for good or for a season.
Both edges carry a thirty-day deadline, and the start has an exemption that small new businesses often misread. This article sets out the rules as the Industrial Training (Training Levy) Order states them, in its consolidated version on Kenya Law, and how to handle each moment in practice.
Thirty days to register
The Order requires a person who becomes an employer to apply to the Director of Industrial Training for registration within thirty days of becoming an employer.
The trigger is becoming an employer, which is a matter of fact rather than paperwork. The safe reading is to treat the first day someone works for the business in return for pay as the start of the clock. That includes a first casual worker or a first apprentice, because the Order's definition of employee for the levy is wider than permanent staff. How to apply, and what to send, is covered in registering for and paying the NITA training levy.
The twelve-month exemption for small new employers
The Order, in paragraph 3A inserted by Legal Notice 10 of 2020, exempts a person who becomes an employer of fewer than one hundred employees from the registration requirement for twelve months from the date the business is registered.
Read that sentence slowly, because three details matter:
- Fewer than one hundred employees. A new business that starts with a larger workforce does not get the exemption.
- From the date the business is registered. The twelve months run from the business's registration, not from the day it hires. A company incorporated a year ago that hires its first employee today has no exemption left.
- It exempts registration. The text summarised here speaks of the registration requirement. Before relying on the exemption for anything more, such as the levy itself, confirm the position with NITA.
A worked example in words: a company is registered in January and takes on its first two staff in March. It has fewer than one hundred employees and is within twelve months of registration, so its exemption from registering runs until twelve months after that January registration; plan to register before it ends. If the same company had been registered two years earlier and was only now hiring, it would have thirty days from the first hire.
Notifying NITA within thirty days of stopping
The Order requires an employer that ceases, permanently or temporarily, to be an employer to notify the Director in writing within thirty days, stating the reasons. NITA's own guidance says the same: an employer that ceases to be an employer must advise NITA in writing within 30 days, giving reasons.
The notice should name the business and its NITA registration number, state the date it stopped employing, and give the reason, whether that is closure, sale of the business or a pause in operations. Keep proof of when and how it was sent. Closing a company involves many other steps; see closing a company in Kenya.
Temporary stops
The duty covers temporary as well as permanent cessation. A tour operator that lets all staff go during the low season, a contractor between projects, or a school that pays no casual staff over the long holiday may each stop being an employer for a while.
Write to NITA when employing stops, and again when it resumes, so that NITA's records follow the business's real position. A letter for each change is a small effort compared with explaining, later, why levy was not paid for months when NITA believed you were still employing.
Setting up and closing the employer in Achekam
In Achekam, a business sets itself up as an employer and runs payroll under South African, Nigerian or Kenyan rules, chosen when the employer is created. Choosing Kenya brings in the Kenyan payroll, which calculates the NITA levy alongside PAYE, the Affordable Housing Levy, SHIF and NSSF Tier I and II, and prepares the NITA schedule from each approved run.
Achekam does not notify NITA, or file with or pay any authority, on the business's behalf. It prepares the documents and records what a person filed and paid. At both edges, that leaves two things for people to do:
- At the start, record the date of the first hire and the business's registration date, and work out whether the exemption applies, before the first pay run.
- At a stop, make sure the final approved run has produced its NITA schedule and that the last levy is paid, then send the written notice.
Keep the registration application, the exemption working, every notice of cessation or resumption, and proof of sending in Document Centre, Achekam's folder-based store, tagged so they can be found by search. A new version of a document keeps the earlier ones.
A start-and-stop checklist
When the business first employs someone:
- Note the date of the first hire and the business's registration date.
- Check whether the business has fewer than one hundred employees and is within twelve months of registration.
- If not exempt, apply to NITA within thirty days of the first hire.
- Register with NSSF too; see registering with NSSF as an employer.
When the business stops employing, for good or for a while:
- Run and approve the final payroll.
- Pay the levy due on it and keep the official receipt.
- Write to NITA within thirty days, giving the date and the reason.
- Write again when employing resumes.
The Training Levy Order on Kenya Law sets out employer registration with the Director of Industrial Training, the levy and when it is paid, so check the text, and NITA's current guidance, before relying on the exemption.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
