Finance Bill 2026 Proposes New Monthly Tax for Foreign Landlords in Kenya
Foreigners who own rental properties in Kenya may soon face a new monthly tax obligation if the proposals contained in the Finance Bill 2026 are approved.
The Kenyan government is seeking to introduce fresh changes in the way rental income earned by non-residents is taxed. The move is part of broader efforts by the state to widen the country’s tax base and improve tax compliance within the real estate sector, especially among property owners living outside Kenya.
Under the proposed law, a new levy called the non-resident rental income tax will be introduced. The tax will apply to individuals and companies that are not based in Kenya but continue to earn rental income from houses, apartments, commercial buildings, or other properties located within the country.
This means that any foreign individual or company receiving rent from property situated in Kenya will now be directly responsible for paying tax on the income earned from those properties.
According to the provisions contained in the Finance Bill 2026, the government defines this income as money “accrued in or derived from the use or occupation of property situated in Kenya” by a non-resident person or entity.
Part of the Bill states that whenever a non-resident earns income through the use, occupation, or leasing of property located in Kenya, they will automatically become liable to pay the newly proposed non-resident rental income tax.
The proposed tax will be treated as a final tax. This means that once the required amount is paid to the Kenya Revenue Authority (KRA), the foreign landlord will not be expected to submit additional tax returns related to that rental income. They will also not be allowed to make further deduction claims connected to the same earnings.
To strengthen enforcement and make compliance easier, the government plans to roll out a simplified registration system specifically designed for non-resident landlords. Through this system, foreign property owners will be expected to register with KRA and regularly remit the required taxes.
The Bill further proposes that the tax should be paid by the 20th day of the month following the month in which the rent was received. This effectively creates a monthly tax remittance requirement for affected landlords.
However, the Finance Bill also introduces an exemption under certain circumstances. The exemption will apply in situations where a Kenyan resident receives rental income on behalf of a foreign landlord and the income is already subject to withholding tax under existing Kenyan tax laws.
In such cases, the non-resident landlord will not be required to file separately or make additional tax payments under the new framework because the taxes will already have been deducted through the resident representative.
The Bill specifically clarifies that the new tax rules will not apply where rental income from Kenyan property is collected by a resident person on behalf of the non-resident owner and is already subject to tax deduction under Section 35(3)(j) of the law.
For many years, taxation of rental income earned by foreigners has remained a major challenge for KRA. Authorities have often struggled to effectively track non-resident property owners and ensure they fully comply with tax obligations, leading to concerns over possible revenue losses.
The government now believes the proposed changes will help seal loopholes in the property sector, improve transparency, and ensure that all landlords earning income from Kenyan properties contribute fairly to the country’s tax system, regardless of whether they live in Kenya or abroad.
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