The taxman has stepped up the onslaught on tax-evading landlords through the latest mapping technology, in addition to accessing bank records on rental income and utility transactions with utilities such as Kenya Power.
The Kenya Revenue Authority (KRA) is implementing a block management system that will use geographic information system (GIS) to map outbuildings in various residences, a top official said.
The system will classify various estates into blocks of flats where the KRA will identify landlords who are tax-compliant and those not in its tax net, and detect new buildings springing up.
“We are investing in block management and geo-mapping systems to map out all these urban areas like Nairobi and Mombasa and get to know where these landlords are and who is paying what tax and who is not paying what tax,” KRA Commissioner for Legal Services and Board Co-ordination Paul Matuku said in an interview.
“It is work in progress in that area (rental income tax) and we will bring all of them (landlords) under tax net.”
The KRA currently relies on its capability to feed financial transactions of individuals and businesses from third parties into its Data Warehouse and Business Intelligence (DWBI) platform to catch tax-evading property owners.
The revenue agency has in the past backed access to third-party data from banks and utility providers as “instrumental in the identification of the landlords”.
Some 76,025 real estate owners were roped into the tax net in three years through June 2021, the latest data show, beating a target of 66,000 landlords it had set for the period.
That was also a growth of 29 percent more than 58,934 property owners recruited in the previous three years between July 2015 and June 2018.
The taxman is banking on the block management strategy to get hold of additional real estate owners in the coming years.
“Block Management Strategy involves tax service offices mapping out their specific areas of jurisdiction into blocks and sub-blocks for better focus,” KRA said via email on Tuesday.
“We will be targeting all existing landlords who are not tax compliant as well as those with upcoming buildings (both residential and commercial).”
Landlords with annual rental income of between Sh288,000 (Sh24,000 per month) and Sh15 million (Sh1.25 million per month) are required to file a monthly tax return declaring the gross earnings rent from which tax payable is computed at the rate of 10 percent.
Section 6A of Income Tax Act further requires property owners with rental income of less than Sh24,000 a month or more than Sh1.25 million to declare such earnings together with other revenue sources when filing annual income tax returns.
The revenue agency says in the current three-year strategic plan for the period ending June 2024, it targets to map 100 percent of the blocks using GIS by end of June.
“The use of geo-spatial mapping technology is yet to commence, but still in our plans for implementation,” the KRA said.
The agency has identified real estate (landlords), high net-worth individuals (HNWI), small traders especially those in informal settings and businesses operating online, among others, as sectors with high potential for growing revenue.
The taxman has in recent years come under fire from business lobbies such as the Kenya National Chamber of Commerce and Industry for over-burdening a few persons in the formal sector with taxes, while a majority of the population remain outside the tax bracket.
An estimated 6.1 million taxpayers had been registered on iTax — the electronic tax payment and filing platform— by June 2021 in a country with more than 19.6 million registered voters in the 2017 presidential poll.
Analysts say this is a pointer that a majority of Kenyan adults may not be tax compliant.
It has set sights on netting additional two million taxpayers in three years through June 2024, targeting to collect Sh6.83 trillion — comprising Sh1.90 trillion this fiscal year, Sh2.27 trillion in 2022/23 and Sh2.66 trillion in the one ending June 2024.
