Are you a landlord? Even just subletting an SQ? Or making money through Airbnb? Have you been declaring and paying your taxes on rental income? If you have, good. You’re a good citizen. If you haven’t, you’re still a good citizen and KRA is in an initiative to save you some tax burden by extending a rental income amnesty for rental income dating 2013 and prior.
When it comes to property and payment of rental income, do not even start to think that KRA will not find you if you try some sneaky moves. By the time you buy the plot on which to put up some rental property, you have already submitted more than enough information about yourself. Buying property in the first place will attract stamp duty and duties and taxes are KRA. Before you put up the property, you’ll need to get authorization from the county Government and that is more info about your landlord plans that KRA can access. A lot of steps you take in property development will involve your PIN certificate, and PIN certificates are KRA. None of these will fail but even if they did, KRA can always get information from your tenants.
So now that we have put the fact that you can’t hide from the taxman out of the way, let’s get into how you get to benefit from the ongoing tax amnesty. You only have to declare and pay taxes for 2014, 2015 and onwards. Anything from 2013 and the years back will be forgiven. That’s right. KRA will forgo your taxes.
Why is KRA extending this olive branch?
Because a lot of landlords have accumulated unpaid taxes over the years and are now afraid of the huge sums that they owe government, and this is quite a challenge. Government wants to grant an amnesty on these past taxes, ease the burden on landlords, start on a clean slate from 2014 onwards and everybody is happy.
When does the amnesty period end?
The amnesty period started on July 1st and will end on 30th June 2016. That’s more than ample time for landlords to do their math and give unto Caesar.
Which landlords can take advantage of the amnesty?
Any individual landlord who is earning an income from their property. Companies that run rental properties are exempt from this rental amnesty.
Are deceased landlords eligible for the amnesty?
Very much so. As someone put it, the taxman will follow you to your grave. In this case, a legal representative or estate administrator for the deceased landlord is allowed to apply for the tax amnesty after accounting for the tax on rental income for the properties in question.
What if I live outside Kenya but earn rental income in Kenya?
Sorry. Physical absence does not save you from taxes back here home. Good news though, you’re also eligible for the rental amnesty. You’ll just need to voluntarily declare and submit returns and pay principal tax due for 2014 and 2015.
What if I totally default on payment of rental income tax? Or even refuse to take advantage of the tax amnesty?
Government has no shortage of options to nab you and when it does, it has several options on how to deal with you. Among others, it can issue notices to banks and other third parties to recover tax from you, it can issue a caveat on your property so that it is impossible to sell it, it can backdate your taxes to as far back as 7 years and it can auction you and sell your property. Those are just a few. In short, just pay up. You do not want to be in the cross hairs of the taxman.
How do I apply for the tax amnesty?
This is available in the iTax systems. Here is a step by step guide on how to go about applying.