This is one of the most common questions from landlords, and the answer depends on whether your property is residential or commercial.
Residential Properties
Residential rent is VAT-exempt under the Kenya VAT Act. This means:
- You do NOT charge your tenants 16% VAT on their rent
- You are NOT required to issue a full eTIMS VAT invoice to residential tenants
- However, you should issue an eTIMS receipt for the rental income — this is the documentation that backs up your MRI tax filing
From 2026, KRA cross-references your declared rental income against eTIMS records. Maintaining eTIMS receipts for your rental income protects you in the event of an audit.
Commercial Properties
If you rent out commercial space (offices, shops, warehouses) and are VAT-registered:
- You MUST charge 16% VAT on the commercial rent
- You MUST issue a proper eTIMS VAT invoice to your tenants
- Your business tenants need this invoice to claim their input VAT deduction
- Failure to issue eTIMS invoices for commercial rent puts your tenants' input VAT claims at risk and may result in them looking for alternative premises
What About Tenant Receipts?
Even for residential properties where VAT doesn't apply, issuing a receipt to your tenant is good practice. It:
- Gives the tenant proof of payment (reducing disputes)
- Creates a paper trail for your MRI tax filing
- Demonstrates transparency and reduces the risk of PAYE disputes with employed tenants
How KompliTax Handles This
KompliTax generates eTIMS-formatted rental receipts for all recorded rent payments. For residential landlords, these are VAT-exempt receipts. For commercial landlords, the system automatically applies the 16% VAT rate and generates full eTIMS VAT invoices. You can send these to tenants directly as PDFs.