In April, the Kenya Revenue Authority (KRA) launched the Electronic Rental Income Tax System (eRITS), a digital platform designed to enhance tax compliance among landlords and property owners in Kenya.
President Ruto has now confirmed that this action is expected to increase rental revenue collection by close to sixfold.
“KRA has rolled out the electronic rental income tax system, which aims to collect KES 80 billion annually, up from the current KES 14 billion,” Ruto said at the Taxpayers Day Awards Dinner.
A successful outcome would see the tax collector meet a key target explicitly defined in the Medium-term Revenue Strategy (MTRS) for the 2024/25 to 2026/27 fiscal period.
Although the projected revenue of KES 80 billion falls within the range of the fivefold growth estimated by the MTRS drafters, it still falls slightly short of the KES 100 billion mark, which the government views as the optimal tax revenue from rental income.
READ: How to File and Pay Monthly Rental Income on iTax
MTRS provides a framework for tax system reforms, primarily aimed at boosting domestic revenue mobilization. Under this strategy, the Government of Kenya is actively reviewing its tax policy and administrative landscape.
The primary objectives of these reviews are to improve the efficiency of revenue collection, identify loopholes that facilitate tax evasion, and enhance overall taxpayer compliance.
MTRS Measures to Expand Rental Income Tax Base
Kenya’s strategy to enhance rental income tax collection is multi-faceted. The government intends to map all rental properties and appoint rental tax collection agents. This is focused on enhancing coverage and compliance.
Collection efficiency is also set to be improved by integrating the iTax system with the National Lands Information Management System (NLIMS).
MTRS called for using technology to simplify tax on-boarding, filing, and payment. This goal has since been achieved with the rollout of the eRITS system in April.
