The proposed KRA landlord registration plan could require all residential property owners in Kenya to register on a new digital tax platform, under draft regulations published on May 2, 2026. The Kenya Revenue Authority (KRA) said the move is intended to strengthen compliance, reduce tax leakages, and significantly increase revenue from rental income. The proposal forms part of the Draft Income Tax (Residential Rental Income Tax) Regulations 2026 and is expected to take effect if approved.
The measure represents a shift in Kenya’s tax administration framework. Currently, landlords rely largely on self-declaration through the iTax system, with registration on the Electronic Rental Income Tax System (eRITS) remaining optional. However, the new proposal would make registration mandatory, marking a structural change in how rental income tax is assessed and enforced.
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KRA landlord registration through eRITS
Under the proposed rules, the KRA landlord registration requirement would apply to individuals earning between KSh 280,000 and KSh 15 million annually from residential rental income. These taxpayers would be required to register their properties on eRITS, a digital platform introduced in September 2025.
KRA stated in the draft regulations that any person subject to residential rental income tax must register their property in an electronic system prescribed by the commissioner. In addition, failure to comply with this requirement would constitute an offence under the law, exposing landlords to penalties and enforcement action.
This provision introduces a more direct oversight mechanism compared to the current system. As a result, authorities would gain improved visibility into rental income flows, which could support more accurate tax assessments and compliance monitoring.
Revenue targets and compliance gaps
The KRA landlord registration initiative is part of a broader strategy to increase tax collection from Kenya’s rental sector. At present, the authority collects an average of KSh 14 billion annually from residential rental income.
However, KRA has set an ambitious target of raising this figure to KSh 80 billion. According to data from the Medium-Term Revenue Strategy, a block and property mapping exercise conducted ahead of eRITS implementation revealed that only about 18% of potential rental income tax is currently being collected.
This gap highlights the scale of underreporting and non-compliance within the sector. Therefore, mandatory registration is viewed as a key intervention to expand the tax base and improve revenue performance.
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eRITS performance and adoption
Six months after its launch, the eRITS platform has recorded limited uptake. According to KRA data, the system has collected just KSh 1.68 million in rental income tax, with 26,668 units registered and 1,412 landlords onboarded.
These figures suggest that voluntary participation has been relatively low. Consequently, policymakers appear to view mandatory KRA landlord registration as necessary to accelerate adoption and improve system effectiveness.
At the same time, the data underscores the challenge of transitioning informal or semi-formal sectors into structured tax frameworks. Many landlords may not yet be fully integrated into digital tax systems, which could affect compliance rates during the initial phase.
Filing requirements and tax structure
The draft regulations also outline stricter compliance requirements for landlords. Under the proposed framework, individuals subject to residential rental income tax would be required to maintain detailed records necessary to calculate their tax obligations.
In addition, landlords would be expected to file returns and remit taxes by the 20th day of the month immediately following the month in which rent is received. This monthly reporting cycle introduces a more continuous compliance model compared to annual filings.
The residential rental income tax rate currently stands at 7.5%, following a reduction from 10% in January 2024. The reduction was aimed at encouraging compliance by lowering the tax burden on landlords.
However, the tax applies only to resident landlords earning income from residential properties. Non-resident landlords and income derived from commercial properties remain outside the scope of this specific tax regime.
Enforcement mechanisms and legal implications
The proposed KRA landlord registration framework introduces clearer enforcement mechanisms. By requiring digital registration of properties, KRA would be able to cross-reference data with other systems, including land registries and financial records.
As a result, authorities could identify discrepancies more efficiently and take enforcement action where necessary. The draft regulations explicitly state that failure to notify the commissioner or register as required would constitute an offence under the law.
This approach signals a move toward data-driven tax enforcement. However, it also raises questions about implementation capacity, including system reliability and taxpayer support.
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Economic and sectoral implications
The introduction of mandatory KRA landlord registration could have broader implications for Kenya’s real estate sector. On one hand, improved compliance may enhance transparency and create a more level playing field among landlords.
On the other hand, increased compliance requirements could raise administrative burdens, particularly for small-scale landlords who may lack formal accounting systems. As a result, some property owners may need to invest in bookkeeping or seek professional tax assistance.
Furthermore, stricter enforcement could influence rental market dynamics. For example, landlords may adjust rental pricing to account for tax obligations, although the extent of such adjustments remains uncertain.
Outlook for KRA landlord registration policy
The success of the KRA landlord registration proposal will depend on several factors, including taxpayer awareness, system efficiency, and enforcement consistency. Effective communication will be critical to ensure that landlords understand the new requirements and timelines.
In addition, the reliability and accessibility of the eRITS platform will play a central role in determining compliance levels. Without adequate system capacity, increased demand could lead to operational challenges similar to those experienced on other tax platforms.
Looking ahead, the proposal reflects Kenya’s broader effort to modernize tax administration and improve domestic revenue mobilization. However, achieving these objectives will require a balance between enforcement and taxpayer support.
If implemented effectively, the policy could significantly increase rental income tax collection and strengthen fiscal capacity. Conversely, challenges in execution could limit its impact and affect compliance behavior.
The proposed changes therefore mark a critical development in Kenya’s tax policy landscape, with implications for both government revenue and the real estate sector.
