Kenya’s commercial and residential rental market has quietly reached a turning point for non-resident landlords. With effect from 1 July 2026, section 4 of the Finance Act, 2026 inserted a new section 6B into the Income Tax Act (Cap. 470, Laws of Kenya) (ITA). Non-resident landlords earning rental income from Kenyan property are now required to register under a simplified framework, and to file and pay non-resident rental income tax at the rate of 30% of the gross rent, excluding Value Added Tax (VAT) where applicable, by the twentieth day of the following month, unless a resident agent is withholding on their behalf. In practice, this amendment gives a non-resident landlord two options with regard to tax compliance on their Kenyan-sourced rental income.
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Option 1: register and file the tax directly
The first option is to register and account for the tax directly, through a simplified registration framework to be prescribed by the Commissioner. Before section 6B was enacted, non-resident landlords did not bear an income tax declaration obligation. It was enough for the tenant to withhold tax and remit it to KRA on the landlord’s behalf. Withholding tax (WHT) on rent paid to a non-resident landlord without a permanent establishment in Kenya was a final tax. Section 6B(2) therefore places new obligations on non-resident landlords, each backed by statutory deadlines and penalties for non-compliance. Non-resident landlords must now register, file a monthly return declaring the rent earned and remit non-resident rental income tax at the rate of 30% of the gross rent on or before the twentieth day of the month following the month for which the rent is paid.
Option 2: appoint a resident agent
The second option is to have the rent received through a resident agent. Section 6B(3) of the ITA provides that subsection (2) shall not apply where the income accrued in or derived from the use or occupation of the property is received by a resident person on behalf of the non-resident person who is subject to the deduction of tax specified in section 35(1)(c). Where a resident agent receives the rent on the landlord’s behalf and withholds and remits the tax under section 35(1)(c), the landlord does not need to register, remit taxes and file returns as required under section 6B(2). From a compliance perspective, the status quo is therefore essentially maintained where a non-resident landlord appoints a resident agent.
What stays the same in Kenya’s rental tax framework
The rest of Kenya’s rental tax framework remains largely unchanged by the Finance Act, 2026. Resident landlords whose residential rent falls within a set income band pay a flat, final tax on gross rent each month. Other landlords, and anyone letting commercial premises, are taxed under the normal annual regime. VAT works separately. Residential rent is exempt. Commercial rent is subject to VAT once the landlord’s turnover passes the registration threshold.
Which route should a non-resident landlord choose?
Non-resident landlords may wish to consider whether to handle registration and monthly filing themselves or appoint a resident agent and retain the status quo with respect to the taxation of their Kenyan-sourced rental income. The appropriate option will depend on the landlord’s circumstances and on the requirements that apply under sections 6B and 35(1)(c). MN Legal can assist with either route, including setting up the relevant tax arrangements and meeting applicable filing and remittance obligations.
Related reading
- Kenya Tax Guide for Foreign Investors: 2026 Setup Checklist
- Entering the Kenyan Market: A Practical Legal Roadmap for SMEs
This note is intended for general guidance only and does not constitute legal or tax advice.
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