Every commercial property owner in Kenya is expected to pay their Rental Income Tax. However, most landlords use the long and tedious method to complete the process.
In order to enhance transparency and streamline processes, the government has rolled out the use of pay bill 222222, which is now the single receiving channel for all government services including making rental income tax payments.
The government has already moved to enhance tax compliance amongst landlords by revising the rental income tax rate downwards from 10 percent to 7.5 percent on gross rent received, a move that has already been welcomed by landlords.
Landlords are supposed to register for a Monthly Rental Income (MRI) before being allowed to submit their Rental Income tax.
Monthly Rental Income (MRI) is payable by property owners on rental income received exceeding Ksh280,000 but below Ksh15 million annually.
A photo of Times Tower,KRA headquarters.
Steps to Register a Property for an MRI
1. Go to the itax portal www.itax.kra.go.ke
2. Go to the registration tab and click on the very last option Register Property details then click on Next
3. Go to section B which should be filled by the taxpayer depending on the type of property ranging from New property, Update property, or Deregister property.
4. After selecting the type of property, proceed to fill out a PIN of a tenant of the said property.
5. The system will auto-populate your name and details.
6. Fill out the needed details depending on the selected options and enter the estimated monthly rent then click on add
7. Enter any remarks under Application Remarks and click on submit.
8. You will receive an acknowledgment Receipt for the registered property details.
For registered landlords who want to submit their returns, they will have to follow these steps.
1. Login to www.itax.kra.go.ke
2. Under the returns tab, click on File Return
3. Select the obligation Income Tax – Rental Income and click on next. This will generate two options:
4. Sections A and B
Select whether you are filing an Original Return or an Amended Return.
5. The total number of properties will be auto-populated based on the number of properties. If there are none, this field will need to be entered.
6. Enter your monthly rental income.
7 . The Tax on rental income will be automatically computed. Where you have any rental withholding certificates and credits for the month in reference, the system will auto-populate and the tax due will also be calculated by factoring in all the credits where any applies
8. The final step is to click the Submit button
9. MRI is a final tax; therefore, persons are not required to declare the same in their annual income tax.
After filing the MRI, generate a payment slip through
The payment registration number is generated through itax via www.itax.kra.go.ke
2. Under the tab Payments select New Payment Registration.
3. Select the tax head as Income Tax and the Tax sub-head as Income tax -rent.
4. Select the payment type as Self-Assessment Tax where the return has already been filed and proceed to enter the tax periods (year and month).
5. After selecting the radio button, click on the Add button then select the payment mode which is through Paybill.
6. Press ‘Submit’ and retrieve a unique payment registration number, which will be used for mobile payment.
After downloading the receipt;
- Go to your sim toolkit
- Enter paybill 222222
- Enter the Payment Registration number (PRN) as the account number.
- Key in the amount indicated on the PRN
- Enter your PIN and click send.
One can also opt to use this method.
1. Dial *222#
2. Select the pay KRA bill option
3. Enter the E-slip (PRN) number
4. Select payment mode M-PESA
5. Enter the M-PESA pin and complete the rest of the process.
Rental Income is filed on or before the 20th of the following month. Complete a monthly tax return online via iTax by declaring the gross rent and tax payable will be computed automatically at a rate of 7.5 per cent.
For any month that the landlord does not receive any rent, he/she shall file a NIL return.
Residential rental income is final tax therefore, persons are not required to declare the same in their annual income tax returns.
A photo of rental apartments.
Tolet Digital Agency