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Reprieve for landlords as Kenya Revenue Authority grants waiver of tax penalties and interests

By Graham Kajilwa | August 7th 2015

Landlords have been granted until June next year to file returns on rental income in a new deal sweetener that also exempts them from penalties and interests on pay back taxes due for 2014 and 2015.

Kenya Revenue Authority (KRA) has said the amnesty had been extended to individual landlords who have been the hardest lot to net, and is expected to boost compliance.

They have been allowed to keep all rental income generated before January 2014 tax-free, with levies kicking in immediately after at a flat rate of 12 per cent of total income.

But there is a catch to potential beneficiaries of the amnesty who are now required to declare their rental income and file returns online before June 30, 2016.

KRA notified the landlords yesterday that they will be issued with compliant certificate upon application, which will not require them to apply further for waiver of interest and penalties.

Townhouses. Landlords have been granted until June next year to file returns on rental income and also exempted from penalties and interest on pay back taxes due for 2014 and 2015.


This move by Kenya Revenue Authority is viewed as a follow-up of the Financial Bill 2015 which targets real estate properties as a major financier of the national budget, with KRA planning to collect Sh3 billion by bringing on board 20,000 landlords in the 2015/16 financial year.

Earlier, KRA Commissioner General John Njiraini had confirmed that already 20,000 landlords have been marked for the exercise. Consumers Federation of Kenya (Cofek) Secretary General Stephen Mutoro has faulted this move, saying that it is bound to fail.

“If KRA is seeking to restructure the whole real estate sector to put on board more landlords to attain their target, then this is unlikely going to work. First, they do not have the correct data on commercial and non-commercial properties. They also need to give incentives to the landlords in order to keep away cartels,” he told The Standard.

Rental income

National Treasury Cabinet Secretary Henry Rotich, through the Finance Bill 2015, advocated for the appointment of real estate agents to collect and remit a withholding tax of 12 per cent charged on rental income to KRA.

However, Mutoro has said that the history of agencies in Kenya is not dependable: “Most agents collect tax and vanish with it. Stakeholders need to develop a public private partnership with radical laws that will streamline the whole real estate industry.”

Kenya Revenue Authority has in the past charged individual landlords at a graduated rate, starting from 10 per cent on the first Sh121, 968 and an additional 5 per cent for every Sh114, 912 above the base. The top rate is 30 per cent for landlords earning over Sh466, 704 a month. The taxman has also recently carried a number of reforms in tax collection that have it try to rope in landlords and property dealers in the income tax net.

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