KRA plans compulsory digital registration for all landlords in new tax push

Kenya’s tax agency is seeking to tighten control over rental income by introducing new rules that would compel all residential landlords to join a fully digital tracking system, following weak early uptake and low revenue collection from the current platform.

The proposed changes are contained in the Draft Income Tax (Residential Rental Income Tax) Regulations of 2026, which require all individuals earning taxable rental income to register their properties through the Electronic Residential Rental Income Tax System (eRITS), replacing the current voluntary registration model.

If the plan is approved, landlords will no longer rely on self-declaration through the existing tax filing process, as registration on the new system will become compulsory for all qualifying property owners.

“A person with income chargeable to residential income tax shall register such property in an electronic system prescribed by the commissioner,” the Draft Regulations state.

The proposal is part of a broader push by the Kenya Revenue Authority to strengthen compliance in the rental sector, which has long been viewed as under-taxed despite its growing contribution to urban economies.

The eRITS platform was introduced in September 2025 with the aim of raising annual rental tax collections from about Sh14 billion to a projected Sh80 billion.

However, performance data released on April 10, 2026, shows limited progress, with the system collecting only Sh1.68 million in rental income tax within six months of rollout. During the same period, 26,668 housing units were registered, while just 1,412 landlords had joined the system.

The rollout followed a property mapping exercise that revealed compliance levels in residential rental taxation stood at about 18.0 percent, highlighting major gaps in reporting and payment.

“The Kenya Revenue Authority has rolled out the electronic residential rental income tax system (eRITS), which aims to collect Sh80.0 billion annually, up from the current Sh14billion”

The government says the digital system is intended to improve transparency, widen the tax base, and ensure better reporting of rental income, especially in fast-growing urban housing markets.

President William Ruto had earlier pointed to the system as part of wider efforts to improve domestic revenue collection and reduce reliance on borrowing.

Under the Draft Regulations, landlords will also be required to maintain proper records of rental income, issue accurate returns, and ensure timely payment of taxes.

“A person subject to residential rental income tax shall be required to keep records necessary for the determination and ascertainment of the tax. They shall submit a return and pay the tax due to the commissioner on or before the 20th day of the month immediately following the month in which the rent was received”

The regulations also reaffirm existing tax rules under Section 6A of the Income Tax Act, which requires individuals earning between Sh288,000 and Sh15.0 million annually from rental income to pay a 7.5 percent tax as a final charge.

In addition to rental tax reforms, the authority is expanding its digital tax infrastructure by integrating customs and value-added tax systems to improve monitoring of declarations and speed up processing of refunds.

If implemented, the mandatory eRITS registration would mark a major shift in rental income taxation, placing landlords under stricter digital monitoring and compliance requirements.