Overview of Withholding tax on rental income

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Withholding Tax on Rental Income

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What is Rent?
Rent means payments received from a right granted to another
person for use or occupation of immovable property.

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Effective date of WHT on rental income
• The tax became effective date on 1st January 2017
• It applies to rent payable for both residential and commercial
property.
• Appointed WHT agents are required to deduct and remit 10%
tax on gross rent paid to resident landlords.

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Qualifications to be appointed as a WHT agent
Kenya Revenue Authority has prioritised the following for
appointment as WHT agents:
• Private Institutions with high compliance status
• Public Institutions

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How appointments are done
• Appointment of WHT agents is done by KRA via iTax.
• Appointed agents are notified manually through letter and also
via iTax.
• Necessary capacity building for appointed WHT agents is done
to facilitate compliance.

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Rate and due date of withholding tax
• Appointed agents withhold tax at a flat rate of 10% of gross rent
paid (excluding VAT where applicable).
• Tax withheld is paid via iTax system on or before the 20th day of
the month following rent payment.

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Is withholding tax a final tax?
• WHT tax is not a final tax. This means that, when the tax due is
paid, a WHT certificate is issued automatically to the landlord and
this will be used to claim tax credits when filling annual returns.

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Payment of WHT tax on rental income
The payment process is as follows;
• Log on to iTax.kra.go.ke
• Click on ‘Payments’ menu
• Select ‘Payment Registration’
• Select the ‘Tax Head’ (Income Tax), ‘Tax Sub Head’ (Income
Tax – Rent Withholding).

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Payment of WHT tax on rental income contd’
• Provide the required landlord, property and gross rent details.
• Click on ‘submit’ to generate a unique Payment Registration
Number - PRN (i.e. E-slip)
• Make payment using the PRN at the bank or via Mpesa, pay bill
number 572572 and account number as the PRN.

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WHT on rental income exemptions
• Only persons duly appointed by the Commissioner should
withhold
• Exempt persons shall not be subjected to withholding tax.
• For non-resident landlords - tenants withhold at 30% of the
gross rent payable to the landlord

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The end