Rent increase fears as landlords targeted for taxes

June 14, 2012 4:50 pm
KRA will implement a comprehensive strategy to hold landlords and tenants accountable despite challenges in the recent past to collect the tax/MUTHONI NJUKI

, NAIROBI, Kenya, Jun 14 – Rents are likely to go up after Finance Minister Njeru Githae used this year’s budget speech to direct the Kenya Revenue Authority (KRA) to map residential areas to ensure all landlords pay taxes.

Unveiling the 2012-2013 budget statement under the theme: ‘Deepening Economic and Social Prosperity within a System of Devolved Government,’ Githae said the KRA will implement a comprehensive strategy to hold landlords and tenants accountable despite challenges in the recent past to collect the tax.

“To safeguard the revenue base and ensure equity, the Kenya Revenue Authority will institute an effective excise tax management system to ensure that all products produced by licensed manufacturer are fully accounted for by type and quantity,” he explained.

“I expect the first phase of this system to be fully operational in the course of the fiscal year,” he confirmed.

The 2012/13 total property income estimates are Sh16.88 trillion, up significantly from last year’s estimates of Sh12.83 trillion and Githae acknowledged that the taxation of non-resident taxpayers who engage in the business of transmission of messages with a base in Kenya has posed challenges to taxpayers and KRA.

To address this issue, he proposed “to amend the Income Tax Act to align their taxation with that of other non-resident taxpayers who engage in other businesses and whose base is in Kenya.”

“The recent upward review by KRA of the minimum tax payable on imported second hand cloths from Sh1.1 million to Sh1.9 million per 20 foot container has forced dealers to reduce imports significantly,” he explained.

Githae revealed that this has forced businesses to close down leaving millions of people who are dependent on the sector poor and vulnerable.

“In order to prevent further loss of business and employment that support millions of our people, I have instructed KRA to immediately revert back to initial valuation method,” he stated.

With the upcoming elections quickly approaching, Githae also stressed the importance for the government to fund the forthcoming general elections to ensure a smooth transition in power.

“During the transition period, the national government will continue to provide services based on the costing of devolved functions, but will ensure that resources are shifted towards those counties that have been marginalised in order to effect equitable development throughout the country,” he announced.

Allocating the IEBC Sh17.5 billion out of Kenya’s record Sh1.45 trillion budget, Githae said he is optimistic that the money will ensure credible elections.

“2012/2013 is an election year that will usher in a new administration and a devolved system of government. We need to conduct the general elections successfully,” he said.

“Towards this end, I have allocated a total of Sh17.5 billion to the Independent Electoral and Boundaries Commission. I, therefore, challenge the IEBC to work smarter and prudently to conduct a transparent and credible election within this resource envelop,” he added.


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