How to file KRA monthly Rental Income tax on itax for Landlords and plan your taxes in Kenya

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Who is eligible for MRI?

MRI is payable by a resident person (individual or company) on rental income accrued or derived in Kenya for the use or occupation of residential property.
Following the enactment of the Finance Act 2020, MRI applicable to persons earning rental income between Kshs. 288,000 (Kshs. 24,000 per month) and KES. 15 million per annum with effect from 1st January 2021.
However, a person may elect, by notice in writing to the Commissioner, not to be taxable under MRI but under the annual income tax regime.
Property owners with rental income above Kshs. 15 million per year will be required to declare the rental income together with incomes from other sources (if any) while filing their annual income tax returns.

What is the MRI tax rate?

The rate of tax is 10% on the gross rent received and if final tax. No expenses, losses or capital deductions are allowed for deduction from the gross rent.

Exemptions from MRI
• Rental income from commercial property
• Non-resident landlords
• Landlords who earn rental income in excess of Kshs. 15,000,000 per year

When is MRI Return and Payment Due?

MRI return is submitted and tax paid on or before the 20th of the month immediately following the month in which the rent was received. For example, rent received in January is declared and tax paid on or before 20th
February.

Are there penalties applicable to MRI?

Late filing of MRI returns attracts a penalty of:
1. Kshs. 2,000 or 5% of the tax due; whichever is higher for individuals Kshs. 20,000 or 5% of the tax due; whichever is higher for corporates Late payment penalty is 5% of the tax due.
2. Late payment interest is 1% per month or part of the month.

0:00 Intro
1:24 Monthly Rental income tax
5:44 When to file MRI
6:22 Penalties for MRI
7:56 Annual rental income tax
9:03 Case analysis
18:03 Filing return on itax
19:36 Outro

The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. This video is designed for entertainment and information purposes only. Viewing this video does not create an accountant-client relationship. You should not act or rely on any of the information contained herein without seeking professional consultation.

ClearTax Consultancy

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