Kenya: Kenya Revenue Authority deploys new tech to nab tax-evading property owners

The Kenya Revenue Authority (KRA) has announced it is implementing a block management system that will use geographic information system (GIS) to map out buildings in various residences as it steps up the onslaught on tax-evading landlords.

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, reported Business Daily.

KRA Commissioner for Legal Services and Board Co-ordination Paul Matuku said, “We are investing in block management and geo-mapping systems to map out all these urban areas like Nairobi and Mombasa and get to know where these landlords are and who is paying what tax and who is not paying what tax.”

“It is work in progress in that area (rental income tax) and we will bring all of them (landlords) under tax net,” added Matuku.

The Kenya Revenue Authority currently relies on its capability 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 in the past backed access to third-party data from banks and utility providers as “instrumental in the identification of the landlords”.

Latest data has shown that over 76,000 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.

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

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

“Block Management Strategy involves tax service offices mapping out their specific areas of jurisdiction into blocks and sub-blocks for better focus,” KRA said via email on Tuesday.

“We will be targeting all existing landlords who are not tax compliant as well as those with upcoming buildings (both residential and commercial).”

Landlords with annual rental income of between Sh288,000 (Sh24,000 per month) and Sh15 million (Sh1.25 million per month) are required to file a monthly tax return declaring the gross earnings rent from which tax payable is computed at the rate of 10 percent.