Taxman steps up onslaught on landlords with mapping technology

Taxman steps up onslaught on landlords with mapping technology

The taxman has stepped up the onslaught on tax-evading landlords through the latest mapping technology, in addition to accessing bank records on rental income and utility transactions with utilities such as Kenya Power.

A top official said that the Kenya Revenue Authority KRA is implementing a block management system that will use the geographic information system GIS to map outbuildings in various residences.

The system will classify various estates into blocks of flats where the KRA will identify landlords who are tax-compliant and those not in its tax net, and detect new buildings springing up.

In an interview, Paul Matuku, KRA Commissioner for Legal Services and Board Co-ordination, said we are investing in block management and geo-mapping systems to find out all these urban areas like Nairobi and Mombasa and how to know where these landlords are and who is not paying what tax.

It is work in progress in that area of rental income tax and we will bring all of them under the tax net. The KRA relies on its capacity to feed financial transactions of individuals and businesses from third parties into its Data Warehouse and Business Intelligence DWBI platform to catch tax-evading property owners.

The revenue agency has backed access to third-party data from banks and utility providers as a key factor in the identification of the landlords. A total of 76,025 real estate owners were roped into the tax net in three years through June 2021, beating a target of 66,000 landlords it had set for the period.

Between July 2015 and June 2018 there was a growth of 29 percent more than 58,934 property owners recruited in the previous three years.

The taxman is banking on the block management strategy to get more real estate owners in the coming years.

Tax service offices mapping out their specific areas of jurisdiction into blocks and sub-blocks for better focus, KRA said via email on Tuesday.

The tax return will be filed with all existing landlords who are not tax compliant, as well as those with upcoming buildings, which have annual rental incomes of between Sh 288,000 and 24,000 per month and Sh 15 million Sh 1.25 million per month.

The income tax return requires property owners with rental income of less than 24,000 a month or more than 1.25 million to declare earnings together with other revenue sources when filing annual income tax returns.

The revenue agency said in the current three-year strategic plan for the period ending June 2024 it wants to map 100 percent of the blocks using GIS by the end of June.

The use of geo-spatial mapping technology is yet to start, but it's still in our plans for implementation, according to the KRA.

The agency has identified real estate landlords high net-worth individuals HNWI small traders, especially those in informal settings and businesses operating online, as sectors with high potential for growing revenue.

The Kenya National Chamber of Commerce and Industry has come under fire for over-burdening a number of people in the formal sector with taxes, while a majority of the population is outside the tax bracket.

An estimated 6.1 million taxpayers had been registered on the iTax - the electronic tax payment and filing platform, by June 2021, in a country with more than 19.6 million registered voters in the 2017 presidential election.

Analysts say that a majority of Kenyan adults may not be tax compliant.

In three years, it plans to collect additional two million taxpayers in the three years through June 2024, which will include Sh 6.83 trillion this fiscal year, Sh 2.27 trillion in 2022 and Sh 2.66 trillion in the one ending June 2024.