Property Owners to Pay Rental Tax , KRA
Kenya Revenue Authority will require property owners with annual rental income above Ksh. 10 million accounts for the rental tax charged at 10 percent of gross revenues.
“Residential property owners earning more than Ksh. 10 million per year and owners of commercial property are required to declare the rental income in their annual income tax returns and make appropriate payments,” KRA said in a public notice on Friday.
Previously, the big owners were being exempted from paying 10 percent of their gross income from rents. They will be required to pay the levies on either monthly, quarterly, semi-annually or annually and file returns every month.
Owners who will fail to pay the tax on or before the 20th of the month will be fined 5 percent of the tax due with a cap of Ksh.20, 000. Those who delay the payments further will attract a 1 percent interest every month.
The law was introduced in January 2016, but owner’s compliance was low, and hence its objectives were never met.
Some of the factors that the Authority has been engaging the owners to succeed in the compliance push are poor bookkeeping, tax system complexity and lack of awareness.
KRA targets to collect Ksh.1.7 trillion by June 30, 2019, and has had much pressure from the treasury to meet the set revenue.