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Taxman goes for small landlords in revenue hunt

BUSINESS
By Dalton Nyabundi | October 26th 2018

The Kenya Revenue Authority (KRA) is engaging landlords across the country in efforts to ensure they pay rental income tax.

The taxman, in renewed efforts to widen the tax base, is offering clarity to property owners on the tax charged at 10 per cent for gross annual incomes of between Sh144,000 and Sh10 million.

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

Lack of awareness

Speaking when officers from the Kisumu tax office met landlords in the town on Wednesday, KRA Western Kenya Chief Manager of Operations John Orioro attributed non-compliance to poor bookkeeping, 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. So we have seen the need to partner with the investors and educate them on what they should do,” he said.

“The monthly rental income is, for example, fairly new and such sessions offer us the opportunity to learn from them the challenges they face with the new regime.”

Mr Orioro said the new push was meant to widen the taxman’s revenue base so as to ease the burden on conventional taxpayers.

Relationship management

 “We want to reach low cadre investors who have a few rental houses,” he said.

The sessions, added the official, were also meant to educate taxpayers on reforms at the authority which are aimed at improving engagements with the public.  “We have introduced relationship management where each taxpayer has a relationship manager with whom they have close relations,” said Mr Orioro.

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