Low tax compliance among property developers has been attributed to a complex taxation system, poor record keeping, relaxed operations by sector players and a lack of awareness about current tax laws.
Yet the real estate being a sector that is robustly growing and given the many tax incentives by the government to ensure its continued growth, the sector has become attractive to the Kenya Revenue Authority’s tax collectors.
Speaking during property developers, landlords, contractors, landowners and property managers free tax remittance training in Thika, RWK and Associates Kenya representative, Regina Wanja King’ori, lamented that most landlords fear approaching KRA offices over harassment.
This means the State is losing revenue despite efforts to raise an additional Sh27.5 billion in tax revenue for the 2018/19 financial year through numerous new undertakings such as levying of 35 per cent tax on a wide range of steel and iron products and similar taxes on paper boards.
“People are building houses everyday, landlords are yet to adjust to the introduction of rental income tax, which is the amount one pays to the government for earnings derived from the use of residential property,” she said.
She challenged the government to partner with tax advisers to sensitise landlords and property developers on the Finance Act, which was introduced in 2015.
Karanja Kamotho, a lawyer and a partner with RWK & Associates said there has been a robust move by KRA to collect taxes. “The government needs the money and so, KRA has become very aggressive. KRA staffs are being trained everyday to make sure they collect every taxation coin from every Kenyan,” said Kamotho.
He said that automation of taxes via ITAX system, inter-connection of many government services that demand presentation of tax compliance certificates is among the modern ways to counter tax defaulters.
He urged the government to reduce the cost of buying land as a way of helping common Kenyans to achieve the government agenda of affordable housing. “Property developers should work with the KRA speed and remit what is due to the government,” he said.