Do Landlords Need to be Onboarded to e-TIMS?
Landlords, like all other business owners, have an obligation to pay tax. Most do this by filing the monthly rental income (MRI) tax. MRI tax is filed monthly and is 7.5% of the gross rent received.
Why Businesses Need e-TIMS Invoices
e-TIMS invoices help businesses prove expenses to KRA when filing their tax returns. Let’s assume you run a business and your gross income for 2023 was Ksh 10,000,000. If you spent Ksh 5,000,000 on supplies, and KRA accepts this expense, you will pay tax only on the Ksh 5,000,000.
KRA will only accept the expenses if they are supported by e-TIMS invoices that you received from suppliers.
If your suppliers didn’t send you e-TIMS receipts, KRA will not accept the Ksh 5,000,000 expense, and you will be required to pay tax on the Ksh 10,000,000 income.
Landlords Don’t Need e-TIMS Invoices for Their Tax Returns
Landlords pay MRI tax, which is 7.5% of gross rent. This means that the expenses incurred, such as cleaning, are not relevant when paying tax.
As such, landlords don’t need e-TIMS invoices for tax because they don’t need to claim expenses when paying tax.
However, landlords may need e-TIMS invoices for other purposes.
Some Tenants Will Demand e-TIMS Invoices From Landlords
Scenario 1: Airbnb Operators
If you are a landlord who rents out some of your units to Airbnb operators, they may demand e-TIMS invoices from you.
An Airbnb is a business that has to file returns and pay taxes. Rent is one of the biggest expenses in an Airbnb, which means it’s important for Airbnb owners to be able to claim it as an expense when paying taxes.
For them to claim rent as an expense, they must have an e-TIMS invoice from their landlord.
Scenario 2: Physical Businesses That Pay Rent
If you are a landlord and you rent some of your units to physical businesses, you’ll need to be able to provide them with e-TIMS invoices.
A physical business pays tax, and they’ll need to prove that one of their expenses is rent. They can only do that if they have valid e-TIMS invoices from the landlord.
What Do You Need to Have to Use e-TIMS?
To use e-TIMS, you need two things:
- An internet connection
- A device that you can use to access the internet and download the invoice
There are several e-TIMS solutions. As a landlord, you can use the web-based solution, which allows you to generate an invoice from any internet-connected device without much hassle. This can be a smartphone, tablet, laptop, or desktop.
Once you generate the invoice, you can download it and send it to your client via WhatsApp, Email, or whatever other means you prefer.
To get expert help when onboarding to e-TIMS, contact us at +254 703 154 483
