Taxing landlords: The elephant in the coffers

In June 2012, then Finance Minister Njeru Githae in his budget speech, directed that landlords be taxed from the following month (July 2012).

Githae said the Kenya Revenue Authority would “shortly implement a comprehensive strategy to ensure that all landlords are effectively brought into the tax net and all rental income taxes are paid.”

Last week, Treasury Cabinet Secretary Rotich was on it again. Proposing to tax landlords a flat rate of 12 per cent on gross rental income. The regime before taxed 30 per cent of profits.

By going for the gross income, what Rotich was effectively telling landlords, and tenants — who will get the short end of the stick, eventually — was that other expenses are your business. After you collect rent, your first stop is KRA the rest utajipanga.

But that is not even the major problem here, for the Government at least. Lack of proper data on the who exactly these landlords are makes the implementation an interesting scenario.

Landlords are in the informal category and taxing them has been, as you might have guessed,  informal. It is at this point that the lack of proper housing data and statistics stars to look like a real problem.

Proponents of Government-backed statistics, like yours truly, would very much like to see if this conundrum pushes the State to start keeping proper, up-to-date records and data on the sector.

Still on the same topic, we take a closer look at what this interest in landlords by Treasury will mean for tenants. This on Page 6.

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