No escape! Here is RUTO’s nuclear plan to force landlords to pay taxes within 24 hours after receiving rent which has caused an uproar.

 

Thursday, May 11, 2023 – President William Ruto’s government has proposed a new tax regime and terms on several goods, services, and income earners. 

In the Finance Bill 2023 prepared by the National Treasury, the Kenya Kwanza government wants landlords to pay their taxes within 24 hours after receiving rental incomes. 

The Bill came under sharp focus by financial analysts, including Deloitte, whose experts observed that it will compel tax agents who are working for landlords to remit withholding tax to a commissioner on behalf of property owners. 

“To submit the information specified in an invalidation notice during the objection stage of a tax dispute within 24 hours,” Deloitte stated.

As a requirement, agents will deduct and remit rental income tax within 24 hours after receiving the payment from tenants who reside within the houses.

It was the first time that withholding tax had been introduced on rental income collected by agents who are appointed by a commissioner in charge of domestic taxes from the Revenue Authority.

“A person who deducts rental income tax under this section shall, within twenty-four hours after the deduction was made remit the amount so deducted to the Commissioner together with a return in writing of the tax deducted and such other information as the Commissioner may require,” reads part of the Finance Bill, 2023.

Deloitte analysts observed that the new tax proposal may complicate issues for Property Agents who will have to work against the deadline set for the 20th day of every month.

“The Commissioner shall, upon receipt of the amount remitted under subsection (3AB), furnish the person from whom the rental income tax was withheld with a certificate stating the amount of the rent and tax deducted therefrom,” reads the Finance Bill, 2023.

Presently, the tax on rental income is governed by the Income Tax Act, which requires landlords to declare rental income on their tax returns and pay taxes on it.

The tax rate for rental income in Kenya is progressive, meaning that the more income you earn, the higher your tax rate will be.