In recent days, we have shed light on the laws that have governed the purchase and ownership of built and unbuilt land for foreigners in Kenya since 2010.
Even if from now on those reading our article are aware that they have purchased land on a 99-year lease, becoming a property owner in Kenya, and particularly in Watamu, Kilifi and other emerging tourist destinations, can be quite an investment.
In this regard, many readers have asked us whether it is possible for a non-resident in Kenya and a foreigner to offer their home on the AirBnB platform to ‘monetise’ right away, and whether it is worth doing so.
Certainly it is convenient and can be done, as long as one follows the legal guidelines and regulations governing property rentals.
Unfortunately, there are still those who are attached to the idea that in Kenya you can do whatever you want or, worse, that in the end you always find an ‘aumm aumm’ solution to fix things. Today, it works less and less like this and cases of compatriots finding themselves in trouble are becoming more and more frequent. We prefer to warn you.
Assuming that a property owner is registered with the tax office (Kenya Revenue Authority) where he/she has obtained a tax number (PIN NUMBER) in order to be able to pay property taxes and those on any employees by filing annual tax returns, in order to operate freely as an AirBnB ‘host’ in Kenya, certain licences and permits are required.
Firstly, the property, be it a flat, villa or even a composite structure (such as b&b, boutique hotel etc.) must be registered with the Kenya Tourism Regulator Authority (KTRA).
Upon initial registration, the owner is required to pay a registration fee of Kes. 1000. 1000, then each year he has to pay a licence fee of Kes. 26,000.
Once registration has been obtained and the first year's licence fee has been paid, it is necessary to obtain an all-inclusive permit covering all business activities. In the case of AirBnB-type rentals, the permit costs about Kes. 10.000.
After that, one has to inform the management authority of the Ministry of Environment, NEMA, which will carry out an inspection to check whether the property complies with environmental regulations. NEMA may formulate a licence fee. Another tax that you will be asked to pay is the 1.5 per cent tax on digital services.
Finally, there are the obvious taxes on earnings. For annual earnings between 288 thousand and 15 million shillings, the taxes are 10% of the gross rental income received quarterly. Tax on earnings, if non-resident, equals 30% of the declared income.
If you exceed 23,000 shillings of earnings per month, there is an additional tax to pay, the WITHOLDING TAX.
COMPANIES
If the property is registered in the name of a company, the company must provide the registration certificate, articles of association and documents proving the regularity of the tax position and KTRA. Remember to keep tax receipts, as they are important for deducting expenses from income tax.
(Sources: KTRA - KRA - AirBnB)