KRA Launches Online System To Track Landlord Taxes

Kenya Revenue Authority (KRA) has unveiled the Electronic Rental Income Tax System (eRITS), touted as a landmark innovation designed to streamline rental income tax compliance in the country.

The eRITS is accessible through the Gava Connect and eCitizen platforms, which support real-time integration with KRA’s digital services.

The platform is designed to enable seamless tax computation, filing and payment of monthly rental income tax, and reduce the administrative burden associated with tax compliance in the real estate sector.

The eRITS is a voluntary compliance tool tailored to support tax compliance by landlords, property owners and agents with residential rental income under the Monthly Rental Income (MRI) tax regime, which only applies to Kenyan residents.

Since its introduction in 2016, the Monthly Rental Income (MRI) tax has applied to landlords earning between $2,213.56 (KES288,000) and $115,289 (KES 15 million)  annually. Effective January 1, 2024, the tax rate decreased from 10% to 7.5%, showcasing the government’s commitment to easing taxpayer burdens.

MRI tax revenue reached $111. 28M (KES14.4 billion) in the 2023/2024 financial year, representing a 5.2percent year-on-year increase from $105.10M (KES13.6 billion) and 94.54M (KES12.3 billion) collected in the two prior financial years.

Experts have lauded the move noting that the platform eases tax compliance for landlords.

“With the rollout of eRITS, the KRA is leveraging technology to enhance revenue collection. While the use of eRITS is not mandatory, it would be ideal to adopt it as it eases compliance,” Alex Mathini, Tax Partner at Bowmans in Kenya says.

Bowmans Tax Partner Andrew Oduor notes further that the KRA has yet to issue the step-by-step guidelines on the eRITS registration process.

“However, once registered, taxpayers will be able to generate and submit monthly MRI tax returns through eRITS. These monthly returns are official and feed into the individual’s or entity’s overall tax returns, easing the person’s annual income tax filings,” Oduor says.

Oduor notes that eRITS is only accessible via Gava Connect and eCitizen platform, meaning that users must have internet access to use the system which may limit its adoption among users with no network.