KRA Commissioner General John Njiraini says the lack of an effective database on property development is limiting the authority’s work to rope in landlords in the tax net.
Njiraini said KRA is also seeking partnership with counties governments to collect rental income taxes and land rates.
“We are in talks with county governments to see if they can do both collections, and the money can then be transferred to the Treasury,” Njiraini explained.
The taxman has launched a nationwide campaign on tax amnesty for rental income that aims to create awareness and enhance voluntary compliance by landlords.
The campaign which is aimed at bringing on board 20,000 new landlords who will be expected to pay at least Sh3 billion in revenue, is valid from July 1, 2015 up to June 30, 2016.
The amnesty includes a 100 percent waiver on principal taxes, penalties and interest for 2013 and 100 percent waiver on penalties and interest for 2014 and 2015.
The amnesty will benefit landlord who shall voluntarily disclose all undeclared rental income for 2014 and 2015 and submit tax return online via iTax and pay principal taxes due.
Further, where expenditure records are not available, landlords will enjoy a deduction of 40 percent of gross rental income as expenditure.
The taxman has so far netted a total of 20,000 landlords into the tax bracket and realized additional revenue of Sh85 billion.
Challenges affecting compliance include huge back taxes, poor record keeping especially on expanses, informal practices and complex tax system, that’s why the government introduced the amnesty in the Finance Act 2015 for landlords.
However, as from January 1, 2016 the government has simplified the rental income tax on a flat rate of 10 percent of gross rents received.