Rental Income Tax In Kenya 2021: Rate, Penalty, Pay And More

Rental Income Tax In Kenya 2021…  Are you looking for a way to file Rental Income Tax In Kenya 2021? If yes, then this informative article is for you. You will be given detailed information on How To File Rental Income Tax In Kenya 2021, Rate, Penalty, Pay, And More.

Starting from the very basics, tax is a mandatory financial charge or some kind of levy that is imposed upon citizens by their different governments. This money is then used by the government for various public ventures. Payment of taxes is mandatory and it is constituted. That means that by law, non-compliance with tax laws is actually punishable. There are many different types of taxation in Kenya and rental income tax is one o them.

Rental Income Tax Rate In Kenya

Rental income taxation in Kenya is currently at the rate of ten percent (10%). This simply means that 10% of the money you make from your rental properties belongs to the government. Learning how to file your returns in Kenya could never be simpler.

This is because a lot of the KRA systems have been digitized using their itax system. This means that you can do a lot of these things online. That is including filing your rental tax returns.

The first important step in knowing the process of filing rental income tax in Kenya is to know the current rental income tax rate. You can find this on the KRA itax site or simply do a Google search and you will stumble upon it. Then after you have knowledge of this, it’s time to compute the amount payable to KRA. It’s simple mathematics really.

First, work out the total amount of rental income you receive from your property or properties. Next, find ten percent of that total and that is the amount to pay in taxes to KRA. Once you have that, the following steps are what you will need to complete the next requirement. Below is the procedure.

• Log in to your itax account
• Download the residential rental income tax return form
• Fill out all the required fields
• Upload it back online
• Submit the form
• Generate the payment slip

In case you find the downloading and re-uploading of the form a bit hectic, there’s some great news for you. You can actually fill out the form fully online and just submit it once you have filled out the information that is needed.

Types Of Properties Subject To Rental Taxation In Kenya

Usually, there are two different types of properties in Kenya. These such properties include residential as well as commercial occupation. Residential, borne from the term reside simply refers to your home where you currently live.

Residential properties are rented out to people to live in. Commercial on the other hand is usually property set up by the owner as an investment where other people can rent out the space for business purposes for a cost.

These property types are both subject to rental income tax in Kenya as well as VAT with exceptions. Rent is generally known to be collected monthly and according to KRA standards, the same are to be filed each month. The due date for filing such returns is usually by the 20th of the month that follows.

It’s also important for taxpayers to know that for solely rental income taxation, there are to be no annual tax returns. The only exception is in the event that the landlord in this case has another means of income that she or he needs to file. That does not apply to rental income tax.

Rental Income Tax Penalty

Tax payer’s money is what the government uses to do its public projects. These are projects that each citizen stands to gain from. These include good health care systems, good infrastructure, and better education systems among many others.

Non-compliance to the tax regulation is obviously thus punishable by law. These are measures put in place as a way to ensure that tax collection is taken keenly by all citizens.

The laws are put in place to keep things streamlined and thus, each landlord must comply. The rental income tax rate 2018 in Kenya, being at only 10% is relatively on the median of the scale in comparison to the likes of Corte d’voire at 20% and with Namibia who pays nothing at all.

So the actual penalty for failure to pay your rental income tax in Kenya is as follows, failure to file your rental tax returns by the 20th day of the month leads to a penalty of 20,000 per month and a charge of 20% on the defaulted tax. It would be wise to be keen on your taxes as this would definitely be a costly mistake.

How To Pay Rental Income Tax In Kenya

Now that you have the basics of your margin or rate for payment of rental tax income as well as the knowledge on how to file returns, it’s only natural that you now learn how to make the actual payment of the taxes. This is a short and simple process but it is necessary that you know where it’s payable to and how to make the payment.

Mobile money transfer is one of the best ways in Kenya for paying rental income tax. The M-Pesa pay bill number is 572572. Remember the payment slip you generated after you completed your form submission earlier; it contains a payment registration number normally seen at the top right corner.

This acts as the account number for your transaction. You can also get to the KRA payment menu on Airtel by simply dialing *572# and follow the given promptly to pay using the E-slip number that will be generated for you.

With the automation of all the processes, it’s easier than ever for all landlords to file property rental income tax returns and there is no excuse whatsoever for any landlord not to comply. Unless they do not own a smartphone or have no access to a cyber. This is however if we fail to consider the fact that all Huduma Centers have a dedicated cyber café with staff ready to help out any stuck citizens. Walk into any cyber café whatsoever and you will find assistance regarding KRA pins so in case you are stuck, be sure to ask for assistance or a twenty thousand shillings penalty will be thrust your way.

Other Types Of Taxes In Kenya

Now that you know how to file as well as pay your rental tax income in Kenya, it’s time you learn other types of taxes that are also levied upon citizens by the Kenyan government. Taxes can be classified as direct or indirect taxes.

Direct taxes usually are levied upon citizens in a straightforward manner and you find individuals file such returns themselves. Indirect taxes are those levied upon you even without your knowledge as a taxpayer.

Some examples of the direct taxes we pay in Kenya besides the rental income tax is the pay as you earn tax. It is commonly known as PAYE. This is the kind of tax that any employee pays from their salary. There’s also another kind of tax paid by corporations known as corporation tax that is at a 30% rate for local companies and at 37% for non-resident companies.

Another kind is withholding tax usually deducted from interest, royalties, commissions, pension, and retirement. Such tax rates vary in respect to what it’s paid for. The rate is also higher for non-resident entities as well.

All the specific information and the respective rates are available on the KRA website. Lastly, there is an advance tax. This is the kind of tax applicable to matatus as well as all public service vehicles. It is said not to be a final tax and is usually paid in advance before such vehicles are licensed.

For indirect taxes, are taxes levied upon citizens in a manner that does not require them to file their own returns but rather in a manner that they may not even notice. A good example is a value-added tax. It is commonly known as VAT. This such tax was introduced in the year 1990 and is levied on the sale of goods at the manufacturing and the importation level under the sales tax system. It is indirect because you do not necessarily know you are actually paying it.

If you fall in our category of those that want to evade payment of taxes then this is unfortunate as each day as a product and service consumer you pay taxes to the government. It’s paramount that the entire taxation process is actually something that all citizens are familiar with.

The process of taxation is now simpler and by digitizing it, the problem of extended taxation has been solved. This means that you and I now have in our power the ability to follow the process in a time-effective manner.

The KRA itax website has plenty more information for any of your questions and it is advisable that as a Kenyan citizen you comply with the laws of taxation.

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