KRA eyes rental income to widen tax revenue

By Macharia Kamau

Nairobi, Kenya: The Kenya Revenue Authority wants landlords to file rental incomes in their annual tax returns due at the end of this month as it seeks to net elusive income from property owners.

Every Kenyan is required to furnish the commissioner with a self-assessment of their taxes from all sources of income. However, this report often falls short of many people’s actual earnings.

Those who are self-employed tend to understate or leave out income sources, while those who are employed fail to mention additional revenue streams.

Gaping deficits

The taxman has attempted to increase its collections to plug gaping Budget deficits, and has in the recent past focused on the lucrative real estate sector.

It turned its focus on landlords by activating dormant segments of the income tax bracket, but has met resistance from property owners who have threatened to increase rent prices if forced to comply with the law.  Further, it has proved too costly to locate owners of segmented residential units.

KRA backed down on its demands on landlords early this year and said it would initially only pursue large property owners.