NAIROBI, Kenya — Landlords in Kenya could soon be required to register on a new digital tax platform if proposals by the Kenya Revenue Authority (KRA) are approved, marking a major shift in how residential rental income is monitored and taxed.
The proposals are contained in the Draft Income Tax (Residential Rental Income Tax) Regulations, 2026, which seek to tighten compliance and reduce revenue losses in the rental property sector.
Under the plan, individuals earning residential rental income would be required to register their properties on a new electronic system known as the Electronic Rental Income Tax System (eRITS).
Currently, landlords primarily rely on self-declaration through the iTax platform, with no mandatory registration requirement under eRITS.
Who will be affected
If implemented, the regulations would apply to residents earning between KSh 280,000 and KSh 15 million annually from residential rental property in Kenya.
KRA says the move is intended to improve compliance in a sector that has historically recorded low tax performance despite its significant contribution to urban economies.
“A person with income chargeable to residential income tax shall register such property in an electronic system prescribed by the commissioner,” KRA stated.
The draft further warns that failure to comply could attract legal consequences.
“A person who fails to notify the commissioner as required under sub-regulation (5) shall be guilty of an offence under the act.”
Revenue targets and system performance
The eRITS platform was introduced in September 2025 as part of broader reforms to boost rental income tax collection, which currently averages about KSh 14 billion annually.
KRA’s long-term target is to raise this figure to approximately KSh 80 billion.
However, early performance data shows limited uptake. Six months after launch, only 26,668 rental units had been registered, with just 1,412 landlords onboarded, generating about KSh 1.68 million in tax revenue.
According to the government’s Medium-Term Revenue Strategy, a prior block and property mapping exercise revealed that compliance in the sector stood at only 18%, highlighting significant gaps in enforcement.
Record-keeping and compliance requirements
Beyond registration, the draft regulations introduce stricter reporting obligations for landlords.
“A person subject to residential rental income tax shall maintain records required to calculate and determine the tax,” the draft states.
Landlords will also be required to file monthly returns and remit taxes by the 20th day of the month following the period in which rent is received.
Tax rate context
In January 2024, KRA reduced the residential rental income tax rate from 10% to 7.5%, a move aimed at easing pressure on property owners while encouraging voluntary compliance.
The adjustment was widely welcomed by landlords, although concerns over enforcement and administrative burden have persisted.
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Notably, the tax applies only to residential rental income earned by residents. Non-resident landlords and income from commercial properties are taxed under different regimes.
The proposed eRITS system reflects a wider government push toward digitisation of tax administration and real-time revenue tracking, particularly in sectors where cash transactions and underreporting have historically reduced compliance.
If adopted, the reforms could significantly reshape Kenya’s property tax landscape, bringing rental income more firmly into the formal tax net while increasing scrutiny on landlords nationwide.
