The Kenya Revenue Authority (KRA) has launched the Electronic Rental Income Tax System (eRITS) as part of its commitment to improving tax compliance in the real estate sector. Built on KRA’s Enterprise Integration Platform, Gava Connect, this system aims to simplify the tax process for landlords, property owners, and real estate agents.
Dr. Chris Kiptoo, the National Treasury Principal Secretary, highlighted that eRITS is a significant milestone in streamlining tax compliance. By enhancing efficiency and equity in the tax system, this initiative will contribute directly to national development, benefiting all Kenyans. Kiptoo emphasized that the taxes collected through this system would support essential sectors like healthcare, education, and infrastructure.
Through eRITS, landlords can now register their properties and file taxes more easily. The system reduces the administrative burden, ensuring a smoother process for everyone involved. By making it easier to comply, the KRA hopes to increase voluntary compliance, ensuring that taxes are paid promptly and accurately.
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Humphrey Wattanga, KRA’s Commissioner-General, shared that eRITS would integrate seamlessly with KRA’s broader tax ecosystem, enabling property owners to compute, file, and pay taxes efficiently through both the Gava Connect API and the eCitizen platform. The system is designed to foster a more predictable and fair tax environment, ultimately benefiting both the government and taxpayers.
Landlords earning between Ksh 288,000 and Ksh 15 million annually are required to pay tax at the rate of 7.5% on their rental income, a reduction from the previous 10% tax rate. This tax rate change in January 2024 aims to ease the burden on taxpayers and drive further compliance.
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In the 2023/2024 financial year, tax revenues from landlords reached Ksh 14.4 billion, reflecting a 5.2% increase compared to the previous year. This indicates that the government’s efforts to streamline tax compliance are beginning to yield results, though the growth rate has slowed compared to the previous fiscal year.