Landlords earning between Ksh288,000 and Ksh15 million annually must pay a monthly residential rental income tax at a rate of 7.5% on gross rent. The amendments aim to improve tax compliance and seal loopholes in rental income declaration.

Under the new regulations, landlords will be required to register their properties on the Electronic Rental Income Tax System (eRITS). They must file monthly returns and remit taxes by the 20th day of the month following receipt of rent.

KRA proposes penalties for late filing and payment ranging from Ksh2,000 to over Ksh50,000. This is part of a broader effort to enhance accountability among property owners.

The Monthly Rental Income (MRI) tax was first introduced under the Finance Act of 2015. It became effective on January 1, 2016, but these new regulations mark a significant shift in enforcement.

KRA stated, “Your voice matters! We want to hear from you before finalising the new Residential Rental Income Tax Regulations and the Graduate Apprenticeship Tax Rebate rules.” This indicates that public input is being sought before final implementation.

In addition, landlords must ensure they register their properties electronically. A person with income subject to residential rental income tax shall register such property in an electronic system prescribed by the Commissioner.

Observers expect these changes will lead to greater transparency in the rental market. However, uncertainties remain regarding how effectively KRA will enforce these regulations.

KRA is seeking public input on the proposed tax regulations until May 25, 2026. This period will be crucial for stakeholders to voice their opinions and concerns about the upcoming changes.

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