The Kenya Revenue Authority (KRA) is now going after landlords and owners of small businesses in the hunt for housing tax collections.
The KRA has announced that landlords across the country will now be required to pay 1.5 per cent of the rent they receive as housing tax to the government.
At the same time, the KRA has said that it will collect housing tax from the gross sales and not from the operating profit of small businesses with annual turnover of between Sh. 1 and Sh. 25 million.
“For clarity, AHL (Affordable Housing Levy), will be charged at the rate of 1.5 percent on the gross income received or accrued. This includes…gross rental income, gross receipts (amount chargeable to turnover), and other sales, before subjecting the same to VAT (value added tax),” the KRA stated in a letter dated May 6, 2024.
The taxman also stated that landlords and small businesses are required to remit the affordable housing levy by date 9 of every month.
The demands by the taxman are expected to result in increased rental prices as many landlords are expected to pass on the extra costs down to their tenants.
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The controversial housing tax was signed into law in mid-March 2024 by President William Ruto. Under the law, employees are deducted 1.5 per cent of their gross salaries. This deduction is the matched by their employers.
“All employers are required to declare the AHL under sheet “M” of the PAYE return on iTax; generate a payment slip under the tax head “agency revenue” and tax sub-head “Housing Levy”; and make payments at KRA agent banks or mobile money through eCitizen Paybill Number. 222 222 or by dialing *222#,” KRA states
“All other persons who receive income or whose income is accrued in Kenya are required to remit 1.5 per cent of their gross income as the Affordable Housing Levy to KRA.”
