KRA unveils new rental tax system to enhance compliance among landlords

The Kenya Revenue Authority (KRA) has unveiled a new digital platform aimed at easing tax compliance for landlords and property owners.

The Electronic Rental Income Tax System (eRITS) is expected to enhance efficiency and boost revenue collection in the real estate sector.

The newly launched eRITS platform is built on the government’s Gava Connect integration system and is designed to automate tax computation, filing, and payment for rental income.

The system is part of efforts to create a fairer and more predictable tax environment, making compliance easier for property owners.

Treasury Principal Secretary Dr Chris Kiptoo said: “Despite reducing the rental tax from 10 percent to 7.5 percent to encourage compliance, the government has been collecting 17 billion annually from rental income tax. Whereas estimates suggest that the potential revenue is at least Ksh.100 billion annually.”

“So we are actually collecting 17 percent of the potential, and that is quite low, which is why we welcome this initiative for us to be able to move to that target.”

Introduced in 2016, the Monthly Rental Income (MRI) is applicable to landlords earning between Ksh.288,000 and Ksh.15 million annually.

KRA Commissioner General Humphrey Wattanga stated: “We continue to experience sporadic year on year growth, in terms of revenue collection. In the last financial year 23/24, the monthly rental income registered a collection of Ksh.14.4 billion translating into a 5.2 percent year on year growth, compared to a collection of Ksh.13. 2 billion, and Ksh.12.3 billion in the previous financial years.”

Authorities are hoping that simplified compliance will translate into higher collections.