Kenya Revenue Authority goes for small landlords in hunt for revenue

KISUMU, KENYA: The Kenya Revenue Authority is engaging landlords across the country in efforts to ensure they understand and comply with the monthly rental income tax requirements. 

KRA, in a bid to widen its tax base, is offering clarity to individual property owners on the tax charged at 10 per cent for gross annual incomes of between Sh144, 000 and Sh10 million (Sh12,000 to Sh833, 000 per month).

Rental income tax came into force on June 1, 2016, but has registered low collection with most landlords failing to declare rental income.

Speaking as officers from the Kisumu tax office – covering Kisumu, Siaya and Homa Bay counties – met the landlords, KRA’s western Kenya chief manager of Operations John Orioro attributed low collections to poor book keeping, complexity in the previous tax system, general lack of awareness and informal operation by the industry players.

“We have realised there is a gap in compliance in the real estate sector, especially on the rental income where we have not made inroads into the taxpaying population. And so we have seen the need to partner with the investors and educate them on what they should do.

The monthly rental income is for example, a fairly new way of paying rent and such sessions offer us the opportunity to also learn from them the challenges they face with the new regime,” said Orioro.

He said whereas compliance from the established investments had not been low, there was “need to reach that tea farmer who has invested his bonus in a rental house and tell them how we have made it easy for them to account and pay taxes.”

This move he said, was part of efforts to widen the tax basket and ease the burden on the conventional taxpayers.