KRA begins enforcement of rent tax as landlords fail to comply

The Kenya Revenue Authority (KRA) has set out on a compliance drive to get landlords to pay tax on rental income.

This comes after landlords failed to comply with a directive to pay 10 percent tax on income from rent despite the authority issuing a six month amnesty.

Speaking to Citizen Digital, KRA Domestic Taxes Deputy Commissioner James Ojee said the authority collects under a billion shillings in rental tax annually despite the directive being issued in 2015.

“The sector seems to be vibrant but in actual contribution by the sector players to our revenue there are challenges. But with the expiry of the amnesty we are now going out in full force for those who do not comply,” he said.

With a revenue collection target of Sh1.4 trillion for the 2016/2017 financial year, KRA is implementing various policies stipulated in the finance act 2016 to seal tax loopholes.

One area the taxman has struggled with is tax collection from rental income, with landlords failing to comply.

This has backed the authority into a corner and is now coming out more forcefully to ensure landlords pay what is owed.

To do this Mr Ojee said KRA had appointed rent tax agents to deduct 10 percent withholding tax on rents in an effort of gathering data on landlords.

“The withholding is supposed to create some intelligence or third party data that will help us follow the non-compliant. KRA will have to go out forcefully and ensure that this data is correct and every sector is paying their correct taxes,” Mr Ojee said.

KRA has prioritized appointment of all corporate tenants (public and private institutions) with extensive branch networks for appointment as rent withholding tax agents.

In addition, KRA has also identified property agents who qualify to be appointed as agents.

The appointed agents are being notified about their obligations to the new law via their official email addresses.