KENYA Revenue Authority is seeking to make it "legally mandatory" for landlords to share their personal details with tenants to curb non-compliance in the rental market.
Commissioner General John Njiraini yesterday said he will seek intervention in June 2013 through an amendment in the Finance Bill to make this a requirement. "It is not a legal requirement as for now, it is just an idea we have...but it should be the trend.
"Ordinarily, parties to a lease agreement should include the landlord's details just as tenants do. So, we are not asking for information that's sort of ground-shaking, it's normal," he said.
Amending the Income Tax Act will also enable KRA to use third-party data from several sources, which will increase the risk of detection for non-compliers.
Details that KRA requires include the landlord's name, ID number, PIN number, postal address, telephone number, physical location, type of houses and number of units, bank details and monthly rent paid per unit. It will use the information to profile incomes earned from rental houses.
The Finance Bill 2012 amended the Income Tax Act, enabling KRA to seek such information through public notices as opposed to the "unworkable practice" of requesting individuals in writing.
"It should not be the case that a tenant lives in a building whose owner they do not know," Njiraini said. The taxman has recently stepped up efforts to optimise tax compliance by property developers and landlords, aiming to raise at least Sh4 billion from the real estate sector alone this financial year.
Njiraini said non-compliance has either been because of ignorance by some landlords or deliberate tax evasion. "The problem is compounded by the fact that in a significant proportion of cases, rent is paid in cash thereby creating tempting opportunities for non-disclosure."
The real property sector has grown by 16-20 per cent annually since 2009, he said, occasioned by huge returns in the form of price appreciation for rentals, land and houses for sale.
"Our increased focus on the sector is therefore deliberate and meant to ensure the sector's tax revenue matches its economic contribution."
Housing Finance managing director Frank Ireri said there is need "to find a fine balance between tax compliance and effective service delivery that reduces the cost of doing business for the real estate community."