THE government is looking to collect Sh100 billion from landlords
and property owners after unveiling
a simpler digital tool to help them
remit taxes in real-time.
Unlike the previous tax payment
system considered complex and costly, the Electronic Rental Income Tax
System (eRITS), unveiled in Nairobi
on Thursday is seamless and augments voluntary compliance within
the sector while reducing administrative burdens associated with taxation.
It is designed to enable seamless
integration with the KRA ecosystem
for purposes of tax computation, filing, and payment; and is accessible through the Gava Connect API portal for system-to-system integration,
and as a service through the eCitizen
platform.
Speaking during the launch, the
National Treasury PS Chris Kiptoo
hailed the launch of the new system
as a significant milestone in the government’s commitment to ensuring a
fair and efficient tax system that will
contribute to national development.
He regretted that the country is
collecting less than Sh20 billion in
rental tax, far away from the annual
potential of Sh100 billion, largely due
to the complex tax filing mechanism.
“The government is committed
to ensuring that the tax system remains fair and that compliance is as
seamless as possible. With eRITS, we are moving towards a smarter, more
efficient tax system that benefits everyone,’’ Kiptoo said.
“With this system, we aim to not
only increase revenue collection but
also create a more equitable and predictable tax environment that benefits
both taxpayers and the government.”
Introduced in 2016, the Monthly
Rental Income (MRI) applies to landlords earning between Sh288,000 and
Sh15 million annually.
The MRI tax rate was reduced
from 10 to 7.5 per cent, from January last year.
This only applies to
residential properties. Commercial
properties, non-resident landlords,
and landlords with very high rental
income (over Sh15 million) are subject to different taxes.
Penalty for non-compliance is a
fine of Sh2,000 or five of the tax due,
whichever is higher for individuals.
The penalty for corporations is
Sh20, 000 or five per cent of the tax
due, whichever is higher.
The penalty
for late payment is five per cent of
the tax. Late payment also attracts
an interest of one per month or part
of the month.
In the last financial year, 2023-
2024, tax revenues collected through
MRI stood at Sh14.4 billion, translating to a 5.2 per cent year-on-year
growth compared to collections of
Sh13.6 billion and Sh12.3 billion in
the previous financial years.
The Housing secretary of the
State Department of Housing and
Urban Development, Athman Said
applauded KRA and its partners for the innovation, saying that the real
estate sector is now poised to be a
major contributor to Kenya’s overall
development through tax revenue.
According to KRA Commissioner
General, Humphrey Wattanga, the
system is a voluntary compliance tool
that aims to support and enhance tax
compliance among rental property
owners and agents, adding that the
system reflects KRA’s commitment
to service excellence, efficiency, and
continuous improvement.
“With this launch, we are taking
a bold step toward a future where
tax compliance is not a burden
but a shared responsibility for nation-building,” Wattanga said.
In a move aimed at modernising
tax systems and fostering seamless
compliance, KRA has unveiled several tools in the past three years, with
the Electronic Tax Invoices added to
its offering in January last year.
The system maintains a record of
stocks through an electronic management system prescribed by the
Commissioner (eTIMS)
