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Section 6A- Residential Rental Income Tax (MRI)
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Increase in the upper income threshold from KES 10 million to KES 15 million and increase (by double) the lower threshold from KES 144,000 to KES 288,000
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More landlords will fall under this simplified 10% tax regime and those earning less than KES 288,000 per annum (KES 24,000 per month) will be exempt. This is to align the exempt threshold of KES 24,000 per month granted to employees In formal employment.
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01 January
2021
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Section 12(D) – Minimum Tax
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This tax will be payable at 1% on gross revenue on the 20th of the fourth, sixth, ninth and twelfth months by all persons regardless of whether they make profits or not. However, this tax will not apply to employment income, any exempt income, 10% residential rent income, turnover tax income, capital gains tax income and income of extractive sectors taxable under the 9th schedule.
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This goes against the basic tenet of levying tax on profits rather than on revenue. Government projects reduced taxes owing to COVID-19 pandemic and thus has cast its net wider to loss making businesses to shore up its revenues.
Their main justification and argument by KRA is that ALL must contribute to taxes for reason that they enjoy public services that are paid from taxes. However, for profit making companies, where the instalment tax payable is higher than the minimum tax, the later shall not apply.
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01 January
2021
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