Kenya Revenue Authority (KRA) has today launched a nationwide campaign on tax amnesty for rental income that aims to create awareness and enhance voluntary compliance amongst landlords. The campaign is aimed at bringing on board 20,000 new landlords who will be expected to pay at least Kshs. 3 billion in revenue.
Landlords who take advantage of this window of opportunity to get their tax records in order will benefit from the amnesty as follows: –
a) For 2013 and prior – 100% waiver on principal taxes, penalties and interest.
b) For 2014 and 2015 – 100% waiver on penalties and interest.
In addition, landlords who take up the opportunity will not be subjected to tax compliance checks or audit for 2013 and prior, 2014 and 2015 if they fully disclose undeclared rental income. Further, where expenditure records are not available, landlords will enjoy a deduction of forty percent (40%) of gross rental income as expenditure.
The condition for tax amnesty qualification is the full declaration of the rental income, online filing of the returns and payment of principal taxes for 2014 and 2015 immediately.
KRA’s Commissioner General, John Njiraini said the campaign is designed to give landlords the opportunity to come forward and disclose any unpaid or under paid tax.
“The aim of this campaign is to encourage landlords who have not been paying tax to declare and voluntarily pay any undisclosed tax’’ said Mr. Njiraini. . In addition, he indicated that KRA has far netted a total of 20,000 landlords into the tax bracket and has targeted to bring on board another 20,000 this Financial Year (2015/16) as part of the tax amnesty campaign.
The tax amnesty is valid from 1st July 2015 up to 30th June 2016.
Njiraini observed that the real estate sector (building and construction) in Kenya has witnessed an annual average growth rate of 7.2% over the period, 2008-2014. Despite this significant growth, tax revenue from this sector has not been commensurate. He singled out high cost of compliance, complex tax system, poor record keeping and huge back taxes as key factors hindering voluntary tax compliance among property owners.
To address these concerns, the government through the Finance Act 2015 introduced tax amnesty and simplified tax regime on rental income.
Njiraini warned those landlords who fail to fully disclose tax due during the amnesty period will be subjected to compliance audits and tax payment enforced as per the law.