Landlords face new challenge as KRA cracks the whip

KRA commissioner general John Njiraini. Photo/File

KRA commissioner general John Njiraini. Photo/File

Rental income taxation has finally taken effect in Kenya and the Kenya Revenue Authority (KRA) expects landlords to meet their tax obligations by Thursday, piling pressure on property owners who are already grappling with rising construction costs and high lending rates.

The rental income tax in Kenya is charged at a flat rate of 10 per cent of the monthly rent received from tenants, and it targets individual property owners receiving less than Sh10 million a year.

KRA in February began sending compliance notices to more than 100,000 residential and commercial property owners who had failed to remit their rental income taxes since January.

KRA acting commissioner for domestic taxes Ruth Wachira told journalists that the taxman had sent compliance notices to 12,000 landlords as of February 7, and the number was expected to rise to over 100,000 by March 31.

“As for those who fail to respond by end of March, KRA intends to estimate residential rental income tax due from the property information available and take enforcement measures provided in the law,” said Ms Wachira.

KRA has at its disposal a number of measures to enforce compliance, including asking tenants of the affected landlords to pay rent directly to the taxman until the debt is fully settled, drawing cash from the landlord’s account and, in worst cases, auctioning the building.

The taxman has been collecting information on landlords in Nairobi and plans to use the data to calculate the rental income tax due.

The data, which is mainly being collected from tenants, include the landlord’s name, postal and telephone contacts, details of property and rental receipts for the units.

KRA has already covered sections of the city centre, Imara Daima, Ngong Road, Dagoretti, Donholm and Zimmerman estates – and it expects to cover the entire city of Nairobi by June.

The Treasury last year introduced rental income tax changeable at a flat rate of 10 per cent with the aim of collecting Sh10 billion annually.

The move has caused panic among property owners who are now rushing to comply with the law.

Post Your Comment

Submit Comment

Copyright 2007-2016 by Samscom Media. All rights reserved | Use of this website constitutes acceptance of our Privacy Policy and Disclaimer.