Finance bill 2023: Ruto’s plan to force landlords to pay taxes within 24 hours
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Ruto in the controversial finance bill 2023 proposes landlords remit their taxes within 24 hours after receiving rental incomes
Ruto in the controversial finance bill 2023 proposes landlords remit their taxes within 24 hours after receiving rental incomes.
President William Ruto’s administration on Thursday, May 4, proposed a new tax regime and terms on several goods, services, and income earners.
The Kenya Kwanza administration asked that landlords pay their taxes within 24 hours of receiving rental income in the Finance Bill 2023 that was drafted by the National Treasury.
The Bill came under sharp focus by financial analysts including Deloitte, whose experts observed that it will compel tax agents who are working for landlords to remit withholding tax to a Commissioner on behalf of property owners.
“To submit the information specified in an invalidation notice during the objection stage of a tax dispute within 24 hours,” Deloitte stated.
As a requirement, agents will deduct and remit rental income tax within 24 hours after receiving the payment from tenants who reside within the houses.
It was the first time that withholding tax had been introduced on rental income collected by agents who are appointed by a Commissioner in charge of domestic taxes from the Revenue Authority.
“A person who deducts rental income tax under this section shall, within twenty-four hours after the deduction was made remit the amount so deducted to the Commissioner together with a return in writing of the tax deducted and such other information as the Commissioner may require,” reads part of the Finance Bill, 2023.
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Deloitte analysts observed that the new tax proposal may complicate issues for Property Agents who will have to work against the deadline set for the 20th day of every month.
“The Commissioner shall, upon receipt of the amount remitted under subsection (3AB), furnish the person from whom the rental income tax was withheld with a certificate stating the amount of the rent and tax deducted therefrom,” reads the Finance Bill, 2023.
The Finance Bill 2023 also seeks to impose daily remittance of excise duty on firms with a history of falsifying actual sales through self-declaration of taxes on returns.
Presently, the tax on rental income is governed by the Income Tax Act, which requires landlords to declare rental income on their tax returns and pay taxes on it.
The tax rate for rental income in Kenya is progressive, meaning that the more income you earn, the higher your tax rate will be.
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