Kenyans now have a chance to weigh in on fresh tax proposals that could directly affect landlords and young job seekers, after the Kenya Revenue Authority (KRA) announced a public participation exercise on two key draft regulations.
The proposals, developed by KRA on behalf of the National Treasury, seek to reorganise the taxation of residential rental income and introduce incentives for companies that take on graduates through apprenticeship programmes.
In a notice published on MyGov on Tuesday, the tax authority said the move is anchored in law and aimed at improving fairness and efficiency in the tax system.
“In compliance with the Statutory Instruments Act, Cap. 2A, the Commissioner General, on behalf of the Cabinet Secretary, the National Treasury, has developed the following regulations: 1. The draft Income Tax (Residential Rental Income Tax) Regulations, 2026. 2. The draft Income Tax (Set off Tax Rebate for Graduate Apprenticeships) Regulations, 2026,” the notice stated.
Rethinking rental income taxation
One of the biggest changes under consideration is how rental income from residential properties will be handled.
Over the years, Kenya has introduced simplified tax regimes such as the Monthly Rental Income tax to make it easier for landlords to comply. However, uptake has remained uneven, with many property owners either unaware of the rules or finding them difficult to navigate.
The new draft regulations aim to clean this up by providing clearer definitions, standard procedures, and a more predictable system for declaring and paying tax on rental earnings. The government is also keen to capture revenue from the fast-growing real estate sector, which has seen a surge in apartment developments and rental units, especially in urban areas.
Officials believe that simplifying the rules could improve voluntary compliance rather than relying heavily on enforcement.
Tax relief tied to youth employment
Alongside the rental tax proposals is a plan designed to address unemployment among graduates.
The Graduate Apprenticeship Tax Rebate would allow employers to offset part of their tax liability if they enrol fresh graduates in structured training programmes. The thinking is simple: reduce the cost of hiring, and more companies will be willing to give young people a start.
Kenya continues to produce thousands of graduates every year, but many struggle to transition into the workforce due to lack of experience. By tying tax relief to apprenticeship opportunities, policymakers are trying to bridge that gap while involving the private sector more directly.
KRA has stressed that these proposals are still in draft form and must go through public scrutiny before being adopted.
“The development of the draft regulations is in line with the Statutory Instruments Act and the Constitution of Kenya, which require participation by the people in the development of statutory instruments and the policies of public finance,” the authority said.
Stakeholders — including landlords, businesses, tax experts and ordinary citizens — have been asked to review the documents and submit feedback.
The drafts are available on KRA’s website, and submissions can be made via email or post. The deadline for sending in views is May 25, 2026.
KRA cautions taxpayers
In the same notice, KRA issued a warning over unofficial payment channels, noting that it will only recognise transactions that are properly received and recorded in its systems.
It also encouraged the public to report any instances of corruption using its established reporting mechanisms, as part of ongoing efforts to improve integrity in tax administration.
These proposals come at a time when the government is under pressure to increase revenue collection without overburdening taxpayers. Expanding the tax base, particularly in sectors like real estate, has become a key priority.
At the same time, youth unemployment remains a major economic concern, pushing authorities to explore policy tools beyond direct government hiring.
If adopted, the new rules could reshape how landlords meet their tax obligations while nudging businesses to play a bigger role in training and absorbing graduates.
For now, the final shape of the regulations will depend on the feedback collected over the next few weeks. This process could determine how Kenya balances taxation with economic growth and job creation.
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