The Kenya Revenue Authority (KRA) is intensifying its efforts to capture rental income that may not be reaching the tax system. Through its Electronic Rental Income Tax System (eRITS), launched in April 2025, the authority is improving the registration of rental properties, simplifying tax filing, and identifying possible gaps in compliance. The platform connects with government digital services, including eCitizen, and allows landlords to register property details, update ownership information, and declare rental income.
On October 28, 2026, KRA told the National Assembly's Departmental Committee on Finance and National Planning that it had identified more than one million property owners through a digital system designed to compare property records with rental-income declarations. The authority is using eRITS to reduce the need for landlords to navigate separate property registration and tax-filing processes. Property owners can access the system through KRA's eRITS portal or the relevant eCitizen services.
Kenya operates a simplified Residential Rental Income Tax regime, commonly known as Monthly Rental Income (MRI). Under the current rules, resident individuals and companies earning gross residential rental income of more than Sh288,000 but not exceeding Sh15 million annually generally qualify for the regime. The tax rate is 7.5% of gross rent received, effective January 1, 2024. For example, a landlord collecting Sh50,000 monthly pays Sh3,750 in rental income tax under the MRI regime.
The tax is final for qualifying residential rental income, meaning it does not have to be declared again in the annual income tax return. Landlords earning less than the Sh288,000 annual threshold generally account for rental income under the ordinary income-tax framework. Those earning above Sh15 million also fall outside the simplified MRI regime and must declare the income under the applicable annual tax arrangements. Commercial rental income is also generally handled under the ordinary income-tax system rather than the residential MRI regime.
KRA's instructions require relevant tenant details, including the tenant's PIN, and estimated monthly rental income. For qualifying landlords, rental income tax returns are filed monthly through iTax. The deadline is the 20th day of the month following receipt of rent. A landlord who receives rent in October, for example, should file and pay the applicable tax by November 20. KRA also requires a NIL return where no rent is received during a particular month.
The authority has also introduced provisions allowing appointed rental income tax agents to collect and remit the tax on behalf of landlords. KRA's published guidelines provide penalties for late filing and late payment. For individuals, late filing attracts a penalty of Sh2,000 or 5% of the tax due, whichever is higher. For companies, the penalty is Sh20,000 or 5% of the tax due, whichever is higher.
When eRITS was launched in April 2025, Treasury Principal Secretary Chris Kiptoo said the government was collecting approximately Sh17 billion annually in rental income tax against estimated potential collections of at least Sh100 billion. That estimate suggested significant room to improve compliance, although the difference does not automatically represent confirmed tax evasion. The rental property market represents a significant revenue opportunity for the government.
Key points
- The Kenya Revenue Authority has identified over 1 million property owners through a digital system designed to compare property records with rental-income declarations.
- The tax rate for residential rental income is 7.5% of gross rent received, effective January 1, 2024.
- The government estimates that potential rental income tax collections are at least Sh100 billion annually, against current collections of approximately Sh17 billion.
