KRA seeks homeowners information as it seeks rental income tax

Kenya Revenue Authority has asked property developers to provide information on customers who have bought houses from them countrywide.

The taxman is targeting homeowners who are renting out their houses and may not be paying the required taxes.

In a letter dated June 28, Josephine Mugure, on behalf of KRA commissioner for domestic taxes, said the information will be strictly used for tax compliance purposes.

The specific letter to Five Star Gardens Syokimau says the information should be provided within seven days.

Mugure said the company should provide the unit number, owners name, owners ID, Owners PIN, occupier, rent paid, the date when the rent was first paid and the last day.

The information should be provided in soft copy on an excel worksheet.

"We look forward to your favourable response," Mugure said.

KRA started tracking landlords evading tax after the one-year amnesty to declare rental income expired on June 30.

The taxman said it is using “a block approach” on rental property, backed by the Kenya Power data and water companies, to crack down non-compliant landlords.

The amnesty was part of the KRA’s incentive to rope elusive landlords into the tax bracket in a bid to meet ambitious tax targets set by the National Treasury.

In 2015, KRA sent tax compliance notices to more than 60,000 landlords across the country.

Under the previous complex tax administration regime, the KRA charged individual landlords a 10 per cent tax on the first net annual rental income of Sh121,968, 15 per cent on Sh236,880, 20 per cent on Sh351,792 while those raking in a net of Sh466,704 paid 25 per cent tax.

Any amount above this value attracted a 30 per cent tax, the same rate as that paid by companies.

The complexity of the previous system made it difficult for individual landlords to calculate the amount due to the KRA, leading to flat revenues from real estate despite a boom sparked off by rising urbanisation.

Source: