Rental Income and Penalties on Late payment

· Residential rental income

is tax payable by resident persons (individual or company) where the rent income is between Kshs. 144,000 (Kshs. 12,000 per month) and Kshs. 10 million per annum.

· Landlords with rental income below Kshs. 144,000 or above Kshs. 10 million per year shall be required to file annual income tax returns and declare this rental income together with income from other sources.

· Residential rental income is charged at a flat rate of 10% on gross rent received per month

· No expenses, losses or capital deduction allowances shall be allowed for deduction from the gross rent.

· Rental Income is filed on or before the 20th of the following month.

What is the penalty for late filing and paying of Residential Rental Income?

Rental income returns are filed and tax payable on or before the 20th of the following month.

Penalty on late filing:

1. 2,000 or 5% of the tax due whichever is higher for individuals

2. 20,000 or 5% of the tax due whichever is higher for corporates

Penalty on late payment:

1. Late payment interest of 1% per month on the unpaid tax until the tax is paid in full.

2. Default penalty of Kshs. 10,000 per month and Ksh. 2,000 per month for corporates and individuals respectively.