The government has reaffirmed that the 2.75% mandatory deduction for the Social Health Insurance Fund (SHIF) remains legally in force, even after the High Court in Milimani raised concerns that it may amount to double taxation.
In an official position statement dated June 23, 2025, Health Cabinet Secretary Hon. Aden Duale clarified that the Ministry of Health acknowledges the court ruling, but emphasized that the contribution is grounded in the Tax Laws (Amendment) Act, 2024 and remains tax-deductible under current law.
“The 2.75% contribution remains legally in force and is now recognized as tax-deductible,” the statement read.
High Court Raises Double Taxation Red Flag
On June 13, 2025, Justice Chacha Mwita, ruling on a petition filed by four doctors, observed that the statutory 2.75% SHA deduction — calculated from gross income after income tax — may amount to unlawful double taxation.
“There’s only one gross income… any further statutory deduction from the same is a duplication and amounts to double taxation,” said the judge.
However, the High Court declined to issue direct orders, citing the ongoing consideration of similar matters by the Court of Appeal.
Government Reassurance and SHA’s Position
Despite the concerns, SHA operations will continue as the government insists it remains compliant with the Universal Health Coverage laws, including the SHA Act, Digital Health Act, and Primary Health Care Act.
The Ministry’s statement further notes:
- SHA’s data transition from NHIF is still ongoing and backed by law.
- Over 22 million Kenyans are enrolled in SHA’s system.
- SHA is launching a door-to-door enforcement campaign to pursue over 44,000 non-compliant employers, even as it grapples with KSh 21 billion in unpaid contributions.
“We invite all Kenyans to walk with us on this journey toward a healthier, more secure future,” said CS Aden Duale, urging stakeholders to support ongoing reforms.
SHA Faces Legal and Operational Challenges
Even with the Ministry’s reassurance, SHA continues to battle public skepticism, employer default, and court challenges.
The recent court ruling, while not enforcing immediate change, signals a potential shakeup if upheld in higher courts.
As Kenya pushes toward Universal Health Coverage, the debate over how to fund it — fairly and legally — is likely far from over.
