Duties of rental income tax agents
What a Kenyan letting agent appointed as a rental income tax agent must deduct and remit, the five-working-day rule, penalties and a monthly routine.
By Achekam · · 4 min read · For Running a business businesses in Kenya
A letting agency's ordinary month is busy enough: collecting rent from tenants, chasing arrears, paying for repairs and passing the balance to each landlord. An agency appointed as a rental income tax agent has one more job woven through all of that. It must take tax out of the rent before the landlord sees it, and get that tax to KRA within days.
The duty is simple to state and easy to get wrong in the rush of month-end. This article sets out what KRA says an appointed agent must do, what failure costs, and a routine that keeps every landlord's tax traceable.
Who is appointed
KRA says rental income tax agents are appointed under the Finance Act 2023, with effect from 1 July 2023.
KRA's summary does not set out, in the passage relied on here, how agents are selected. Whether your agency has been appointed is a matter between it and KRA. If you collect rent on behalf of landlords and are unsure whether the duty applies to you, ask KRA directly, and keep its answer on file, before the next month's collections.
The rate and the five-working-day rule
KRA says appointed rental income tax agents deduct tax at 7.5%, from 1 January 2024, and remit it within five working days after the deduction.
KRA's withholding tax FAQ shows the same 7.5% withholding on rental income by tax agents from 1 January 2024. The same FAQ lists residential rent under the Monthly Rental Income regime at 7.5% for residents and 30% for non-residents. If any landlord you collect for lives outside Kenya, confirm with KRA which rate and which rules apply to that landlord's rent before you deduct.
The five-working-day window matches KRA's general rule for withholding tax: the payer of income subject to withholding must deduct the tax at source and remit it within 5 working days after the deduction is made.
A worked example in words: if the agency deducts the tax from a landlord's rent on a Thursday, and there is no public holiday in between, the tax must reach KRA by the following Thursday. Because the clock runs from the deduction, agree internally, with KRA's guidance in hand, the point at which your agency treats the tax as deducted, and use it consistently for every landlord. Withholding remittance timing in general is covered in when withholding tax must be paid over.
The penalty for not deducting
KRA says failure to deduct withholding rental income tax attracts a penalty of 10% of the tax involved, and late payment of any withholding tax attracts 5% of the tax due.
The two penalties catch different mistakes. Forgetting to deduct leaves the agency facing the first, on tax it never held. Deducting correctly but paying over late attracts the second. Both are avoidable with a fixed routine, and both fall on the agency rather than the landlord.
Arrears make this harder. When a tenant pays part of the rent, or two months at once, remember that the agency can only deduct from money it has actually collected; deduct from that receipt and remit on the same timetable. Keeping the tax calculation tied to each receipt, rather than to the rent the tenant owed, stops the figures drifting apart when collections are irregular.
Statements to landlords
A landlord whose rent has had tax taken out needs to see it clearly. For each landlord, each month, issue a statement showing:
- each property and the gross rent collected for it;
- the tax deducted, with the rate used;
- the Payment Registration Number under which the tax was paid, and the date;
- the agency's own fees and any other deductions;
- the net amount paid to the landlord, and how.
The landlord needs that record for their own tax affairs, whether they file under the monthly regime or the annual one; Monthly Rental Income tax for landlords explains the landlord's side. Where tenants rather than agents withhold, see withholding tax on rent paid by tenants.
Recording remittances in Achekam
KRA says all tax payments by mobile money must be made through the Government PayBill 222222, and that the account number is the Payment Registration Number, or reference, on the payment slip generated from iTax.
Achekam records a Kenyan tax payment with KRA's own reference and receipt, the PRN, and never generates a payment reference itself. It refuses Kenya's discontinued paybill 572572, and a second person must confirm each payment before it counts. For an agency remitting tax for many landlords every week, that second check catches a PRN keyed against the wrong slip before it becomes a dispute with KRA.
Once its rules are approved, Achekam also computes Kenyan withholding tax among its tax computations. Check the rate it applies to rent against KRA's current page before you rely on it, and keep the iTax slip for every remittance with the payment record.
The agent's monthly routine
- Record each rent receipt against the right landlord and property as it arrives.
- Deduct the tax at the rate KRA sets, at the point your agency has agreed counts as deduction.
- Generate the payment slip on iTax and pay against its PRN within five working days.
- Record the payment with its PRN and receipt, and have a second person confirm it.
- Pay each landlord the net amount, with a statement showing the tax deducted and its PRN.
- At month end, check that tax deducted, tax remitted and tax shown on landlord statements all agree.
KRA's withholding tax FAQ answers common questions on which payments are subject to withholding, who must withhold, the remittance window and how withholding certificates reach the payee.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
