KRA amnesty for landlords ends

An apartment in Hurlingham, Nairobi on January 1, 2016. PHOTO | JEFF ANGOTE | NATION MEDIA GROUP

What you need to know:

  • The Kenya Revenue Authority is conducting a countrywide crackdown on landlords who will have failed to file returns by today’s deadline. It has sent tax compliance notices to more than 60,000 landlords across the country.
  • According to Benson Korongo, the senior deputy commissioner at the authority's domestic taxes department, landlords who do not file their returns in time could eventually lose a significant amount of their rental income should the tax collector decide to use all the weapons in its arsenal to enforce compliance.

The noose is tightening on landlords who have ignored an amnesty given in January for them to declare rental income and pay taxes on it by the end of today.

The Kenya Revenue Authority (KRA) is conducting a countrywide crackdown on landlords who will have failed to file returns by today’s deadline. It has sent tax compliance notices to more than 60,000 landlords across the country.

In Nairobi alone, the KRA has deployed 300 officers to gather information on landlords through the block management system, a move geared towards obtaining as much information as possible on the landlords’ tax obligations.

“From third-party information available at public institutions, KRA has particulars of all owners of rental buildings,” said Benson Korongo, the senior deputy commissioner at the authority's domestic taxes department. “However, KRA is undertaking an exercise to physically identify where all these properties are located so as to gather more actual information on the owners, number of units or rooms, rent charged per unit and estimated tax per property.”

According to Mr Korongo, landlords who do not file their returns in time could eventually lose a significant amount of their rental income should the tax collector decide to use all the weapons in its arsenal to enforce compliance.

“KRA will estimate tax due from all those landlords who will not comply by June 30, 2016 and take various measures to enforce compliance,” said Mr Korongo. “KRA will issue agency notices via their bank accounts and tenants to recover tax and finally attach the property.”

In addition, the taxman will from tomorrow ask all corporate tenants (public and private companies or institutions) as well as property agents to withhold 10 per cent of all payments to their landlords per month, to be remitted to the KRA as tax.

In extreme cases, the KRA could take money directly from the defaulters’ bank accounts to settle their accounts or even seize and auction their properties.

Rental tax, which was introduced by the Treasury in the 2015 Budget and is charged at a flat rate of 10 per cent, came into effect in January this year. Landlords were then given an amnesty up to today to fully disclose taxes due since January. Those who have filed their returns and have correctly paid all taxes owed from January will enjoy a waiver from all taxes and interest accrued from 2013 and prior years.

The stiff measures were put in place to ensure an additional Sh3 billion taxes is collected from newly registered landlords. This, however, falls short of the Sh10 billion that National Treasury Cabinet Secretary Henry Rotich was targeting last year.

At the moment, the KRA has 20,200 landlords in its database and expects to recruit 5,000 more this tax season. It has warned that today’s deadline will not be extended.