KRA Monthly Rental Income (MRI) & Turnover Tax Guide for Landlords and SMEs

Monthly Rental Income and Turnover Tax serve different types of income. MRI applies to qualifying residential rent. TOT applies to qualifying business turnover. Neither is a label to choose simply because its form looks shorter. Check residence, the type of income, annual thresholds and registered obligations first. A person with both a rental property and a shop may need separate records and separate returns.

Who falls under Monthly Rental Income?

KRA’s residential rental guidance describes MRI for resident persons receiving qualifying residential rental income above KSh 280,000 and not exceeding KSh 15 million per year. Commercial rent, non-resident landlords and income above the upper threshold are outside this regime and require the appropriate tax treatment. The threshold is annual income, not the value of the property or the number of tenants.

The MRI rate is 7.5% of gross residential rent received from 1 January 2024. The return and payment are due by the 20th of the following month. Under this gross-rent regime, do not subtract repair bills, agent commissions, mortgage repayments or other expenses before applying the rate. Check older periods separately because the rate before 2024 was different.

Build a simple monthly rental record

• List each property or unit and distinguish residential from commercial use. Do not combine different tax regimes without checking their treatment.
• Record the rent actually received, receipt date and the month it relates to. Reconcile cash, bank and M-Pesa collections with any letting agent’s statement.
• Identify advance rent, arrears and deposits separately. A refundable deposit is not automatically the same as rent; ask about the treatment of unusual receipts.
• Record vacant units and months with no rental receipt. Keep tenancy and collection records supporting any Nil declaration.
• Keep the registered landlord PIN and previous acknowledgements available. Filing on a caretaker’s or agent’s PIN does not settle the landlord’s obligation.

File an MRI return on iTax

1. 1Sign in yourself at https://itax.kra.go.ke. Verify that Monthly Rental Income is the correct active obligation for the landlord.
2. 2Open the return-filing menu and select Monthly Rental Income using the current portal labels. Choose the correct month and year.
3. 3Enter the qualifying gross rent received for the period from your reconciled records. Review the calculated tax at the rate applicable to that month.
4. 4Check the declaration and submit. Download the acknowledgement and retain it with the rental schedule.
5. 5Generate the payment registration for the correct MRI period and amount. Use the PRN on the slip when paying through the permitted channel.
6. 6Confirm payment allocation and keep the receipt. Complete the process by the 20th of the following month; a saved draft is not a filed return.

Example: calculate tax on gross rent

If qualifying residential rent received for a month is KSh 40,000, a 7.5% MRI calculation gives KSh 3,000. Paying KSh 5,000 for repairs does not reduce that gross-rent figure to KSh 35,000 under MRI. This is an illustration of the rate, not a determination that every landlord belongs in the regime. First check the annual thresholds, residence and nature of the property income.

Where an agent collects rent, reconcile what the tenant paid and what the agent remitted. A net transfer after commission can be lower than gross rent. Keep the statement explaining the difference. If tenants pay several months at once or settle old arrears, use the applicable receipt and period rules rather than moving amounts around to make each month look identical.

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Vacant property: when a Nil MRI return is appropriate

If the MRI obligation remains active and there is genuinely no rental income to declare for a month, file the appropriate Nil MRI return. Vacancy does not automatically suspend the registered obligation. Check all units and any arrears or advance receipts before choosing Nil: one empty house does not make the entire landlord’s return Nil if other units produced rent.

1. 1Confirm the period and reconcile all rental receipts, including collections by an agent.
2. 2Where no income is reportable, select the relevant Nil-return workflow for the MRI obligation, not an annual individual income tax Nil return.
3. 3Review and submit the declaration, download the acknowledgement and keep evidence of the vacant or non-receipt period.
4. 4If you have permanently stopped receiving rental income, ask KRA about amending or cancelling the obligation. Continue following the active obligation requirements until its status is formally resolved.

Do not rely on a claim that every missed MRI month attracts KSh 10,000. KRA’s MRI guidance distinguishes individuals and non-individuals: late filing is 5% of tax due or the applicable minimum, whichever is higher, with KSh 2,000 for individuals and KSh 20,000 for non-individuals. Late-payment charges are separate. Read the assessment for the actual period and taxpayer type.

Turnover Tax for a small business

KRA’s TOT webpage describes the regime for qualifying resident businesses with annual gross turnover more than KSh 1 million and not exceeding KSh 25 million. Turnover means sales, not profit after expenses. Rental income, management, professional and training fees and other excluded income should not simply be placed in TOT. Check the scope and any election to use the ordinary income tax regime before filing.

KRA’s current TOT webpage displays 1.5%, while an older 2023 KRA publication displays 3%. Do not use an old rate without checking the legislation and iTax computation for your filing period. This guide deliberately does not apply one rate to every historical month. The monthly return and payment deadline is the 20th of the following month; keep each month’s gross sales record so the applicable rate can be applied correctly.

1. 1Check that TOT is registered and suitable for your business income, annual turnover and taxpayer status.
2. 2Reconcile sales from cash, bank, M-Pesa, tills and electronic invoices. Exclude transfers that are not sales only where records support that treatment.
3. 3Open the TOT return in iTax, choose the correct month and enter the qualifying turnover using the current form.
4. 4Verify the rate and calculated amount applicable to that period, submit the return and save the acknowledgement.
5. 5Generate the correct payment registration, pay using its PRN and confirm allocation by the deadline. Check the relevant Nil workflow for a genuinely zero-sales month while the obligation is active.

eTIMS and VAT are separate checks

KRA says persons engaged in business, including MRI and TOT taxpayers, must check electronic tax invoicing requirements even where they are not VAT-registered. Use the appropriate eTIMS solution or an applicable KRA-recognised invoicing arrangement. An M-Pesa message is evidence of a payment, not automatically a compliant electronic tax invoice. Keep invoice and payment records matched so returns can be checked.

A business making taxable supplies at the VAT registration threshold of KSh 5 million must also check VAT registration. TOT status does not remove VAT duties. Check exemptions and the nature of supplies with KRA before assuming that turnover alone answers every question. Likewise, completing eTIMS registration does not itself file or pay MRI, TOT or VAT returns.

Get help with the right obligation

Use the KRA service link or WhatsApp button below and explain whether you need rental filing, business turnover filing or an obligation review. Mention the periods and whether income was received; agree which records to share next. Cyber Kenya’s assistance fee is separate from tax payable. Keep passwords and OTPs private and authorise payments yourself.

Official references

Check KRA’s Residential Rental Income, Turnover Tax and What is eTIMS pages at https://www.kra.go.ke. Use the applicable legislation and https://itax.kra.go.ke for period-specific rates and filing. Review the obligation when your income type or annual turnover changes rather than continuing with an unsuitable regime.