Has VAT led to high house rents?
“…I’m speaking like a minister of finance. When you are borrowing the way they are borrowing, now you find that we have VAT on rent. We didn’t have VAT on rent. Now when you rent a house, the landlord must pay VAT, which he never used to pay. The landlord then pushes the VAT to the tenant. That is why rent is going up, because the Jubilee government has introduced VAT on rent…”
- Nasa’s Musalia Mudavadi in Kiambu on July 4
Nasa Co-principal Musalia Mudavadi was speaking in Swahili as the opposition coalition stopped in Limuru during its pitch through Kiambu County.
He claimed that due to the increasing debt that the Jubilee government has taken on, they have added Value Added Tax (VAT) to house rent.
The Income Tax Act of 1974 had stated that tax was payable on gains of profits from "a right granted to another person for use or occupation of property". But the government began to collect income taxes from rent in 2012 more aggressively, following the Budget Speech by then Finance Minister Njeru Githae.
“The Kenya Revenue Authority will shortly implement a comprehensive strategy to ensure that all landlords are effectively brought into the tax net and all rental income taxes are paid,” Mr Githae said