KRA now moves into estates in search of landlords dodging taxes

The Kenya Revenue Authority has stepped up efforts to move into estates in search of landlords who do not pay rental income tax from the money they receive from their tenants.
The Kenya Revenue Authority (KRA) has stepped up efforts to move into estates in search of landlords who do not pay rental income tax from the money they receive from their tenants.
On November 3, the KRA sent a notice to property owners at the expansive Nyayo Estate in Nairobi informing them of plans to collect data.
Nyayo Estate, a gated community with 4,774 units built by the National Social Security Council, is a perfect candidate for the taxman’s latest efforts to rope in more landlords, partly due to its formal ownership structure.
“This is to confirm that KRA will conduct a sensitisation exercise to create awareness on the monthly rental income at Nyayo Estate Embakasi-Malaika Park Gate D on 11.11.2023 at 9am and thereafter undertake data collection exercise on rental income properties,” reads part of the notice undersigned by KRA’s chief manager in charge of rental income.
“Kindly take note that it is mandatory to comply with the requirements of the Public Notice and KRA legal statutes on the provision of records to KRA as per section 24 & section 59 of the Tax Procedures Act and we look forward to a smooth operation,” the notice added.
The law requires landlords with an annual rental income of between Sh288,000 (Sh24,000 per month) and Sh15 million (Sh1.25 million per month) to file a monthly tax return declaring the gross earning from which tax is computed at the rate of 7.5 percent.
With the government fast running out of options to tax, the booming property market has been seen as a low-lying fruit by the administration of President William Ruto. Consequently, new measures have been put in place to optimise the collection of rental income tax.
In the Finance Act, 2023 property agents are required to deduct and remit rental income tax within 24 hours after receiving the payment from tenants.
The new law has also introduced the withholding tax rental income collected by agents appointed by the KRA commissioner in charge of domestic taxes.
Initially, landlords were required to pay the money on the 20th of every month. However, the new proposal requires agents to remit the tax within 24 hours of receiving the tax payment.
Rental income is one of the tax heads that the government will be relying on to finance its Sh3.93 trillion budget in the Financial Year 2023/24.
“Implementation of rental income tax measures by mapping rental properties will be achieved through enhanced field data analysis mopping up, integration of iTax (system) with the National Lands Information Management System and use of a mobile App,” said the National Treasury in the budget documents.