Rental income as a tax type is administered by the Domestic Taxes Department, which is one of the principal revenue departments under the purview of the GRA and responsible for the administration of direct taxes in The Gambia.

So to start with, rental income is the income derived from rented properties and charged based on being rented properties, either as commercial or residential rents. It is imposed/ or taxable on a yearly basis to a person (s) who have taxable rental income (s) source of earnings, as an income generating activity in receiving gains or profits as an undertaking investments on rents. On this note, rental income is classified into two that is Residential Rent Tax and Commercial Rent Tax.
 
Residential rent tax
Residential rent tax is the tax charged on residential rented properties occupied as a private residence and does not include a hotel, Inn or Guest House. The tax rate imposed on residential rents is 10% percent on the total amount of rent (s) received by the owner (s) on annual basis. The taxable rental amount of a person for a tax year is the total rent (s) received by the person from the lease of residential property in The Gambia, based on the year the rent (s) is/ are received.

It is a final tax and cannot be included in gross income in computing the chargeable income of the person who received it for any tax year. In a similar vein, no deductions are allowable for any expenditure incurred in deriving the rent, under the Income and Sales Tax Act. In a simpler digestion, no claim can be made for any incurred expenses on the rented property. Likewise, no amount can neither be substantiated nor reduced by any loss in the computation of residential rental income (s).

Procedure of residential rent tax
The procedural method of residential rent tax is simply tailored as a conduit to enhance voluntary compliance in residential rent tax declaration and payment. The Domestic Taxes Department has designed a form, specifically for the declaration of residential rent tax received, by the residential rent taxpayer (s). Is it a requirement for residential rent taxpayers’ to furnish residential rent tax returns to the Tax Office? Of course, it is a tax requirement on the Gambia’s laws for residential rent taxpayers to furnish residential rent tax returns.

Therefore, all persons having residential rents that are rent out as residential property are obliged by the tax laws to furnish a residential rent tax return for each tax year within three months after the end of the year. Failure of not furnishing a residential rent tax return for a tax year by the due date could result to the ‘Best of Judgement’ decision of the Commissioner General in determining the taxable rental amount of the non-compliance taxpayer for the year and make assessment. The rationale for furnishing residential rent tax returns is to encourage the principle of the ‘ self-assessment tax regime as a means to facilitate voluntary tax compliance and to ensure tax integrity and transparency in providing the tax office with reliable and correct information, regarding incomes received from rented property on residential bases. Can rental income charged on residential rent tax be paid at once or on an instalment basis? Indeed, the tax charged can be paid instantly or on an instalment payment once an assessment has been made.

The GRA has devised a mechanism in the payment of rental income tax for which it could be paid through on an instalment payment plans based on the quarterly payment options of the adopted Self Assessment Tax Regime. This is because the GRA based on its national commitment as a partner in development has placed fundamental emphasis in ensuring that businesses/or individuals operating within the business cycle of rental income stay in the ‘doing business environment’ of the country.

This is enhancing tax compliance culture in the country’s drive for national development in all sectors of the economy.  The due date for the payment of residential rent tax is due on the 26th of  February, which is the specified date set aside for furnishing residential rent tax return in The Gambia.

Commercial rent tax
Commercial rents on the other way refer to rents derived from Hotels, stores, offices, Guesthouses and Motels. The computation of commercial rent is assessed as gross income and based on its global source. The legality of commercial rental income is premised on gross income and is extensively covered in Article 15 of the combined Income and Sales Tax Act 2004 that clearly and simply explains the inclusivity of the calculation and assessment or chargeability of commercial rents received within the span of one year.

The computations of commercial rents are assessed on the taxability of gross income received. It is based on the progressivity of the applicable tax rates, for which tax band it falls upon when all the necessary deductions are made from the chargeable income (s).
The rationale for the difference in the computation of rental income on either residential or on commercial rents are taxed differently due to their mode of administration in the Gambia. For residential rent tax that is charged separately on the global amount received from the paid rents at the 10% per centum rate, whilst Commercial rents are assessed as part of the gross income received and for which 1/6 is allowed as deductions for repairs.

Allowable deduction against rental income on commercial rents. Any expenditure wholly and exclusively incurred in the production of rental income will be allowed as a deduction from rental income. The following are some of the allowable expenses.
1.    Maintenance and upkeep of the property i.e. (repairs), that is land rent and rates paid, normal maintenance (painting and repairs costs);
2.    Structural alternations to the building though of capital nature will be allowed if made to maintaining the existing rent;
3.    Reasonable advertising expenses to secure tenants;
4.    Commission and fees paid to property management agents; and
5.    Interest on loan (s) received to construct the/a building that is rented out.

Therefore, it is noteworthy for rental property owners to note the following:
1.    That the cost of structural extensions would not be allowed as deductions
2.    If part of the property is occupied by the owner then all the allowable deductions will have to be apportioned and the part relating to owner will not be allowed
3.    Where property is let for short periods e.g. holiday cottages, the full years expenses will be allowed.

Taxing rental income is both a challenge and an opportunity to the nation’s sustainers in domestic revenue mobilisation, particularly (GRA).It is a challenge due to the high non-compliance, nil/null and false declarations made by residential rent taxpayers. More so, the failure of tenants of not making voluntary tax disclosures of not providing the Tax Office with substantiated and reliable information, regarding their paid rents to rented property owners is another challenge. Overall, the administration and collection of rental income on residential and commercial rented properties is a challenge. A challenge that crave for our total commitments anchored on the principle of ‘collective responsibility’ in seeing to it that the problems associated with rental income is addressed for the benefits of all in maintaining a good standard of living, with reasonable and affordable cost charges.

Rental income is an opportunity. Therefore, it could serve as a potential revenue collection base for the GRA, if rental property owners, real estates and agents exercise the principle of voluntary disclosure and compliance in their tax payment.  It could also be a blessing opportunity if properly administered effectively and efficiently by the Gambia Revenue Authority. Remember that facilitating tax services and administering taxation cannot by wholly shouldered by the GRA but all ( Gambians and non-Gambians) engaged in any income generating activity in the country must endeavour to assist the GRA in its assigned mandate of giving government the necessary revenues for its development needs agenda.

Rental income payment is premised on the universal principles or canons of taxation and these are:
a.    principle of certainty
b.    principle of convenience
c.    principle of productivity
d.    principle of diversity
e.    principle of simplicity, and;
f.    Principle of elasticity.
The principles of taxations or canons as popularly coined by renowned economists as the fundamental tools and catalyst in enhancing the rationality and justification of tax collection, and in particularly the ‘onus’ of rental income computation. The principle of taxation serves as the reflective mechanism in maintaining a culture of understating for the imposition of taxes to enhance the culture of compliance and understanding.

Therefore, the principle of certainty is very fundamental in the payment of rental income. This is because it is very important for the payer of rental income tax to know the time of payment, the manner of payment, the quantity to be paid ought to be clear and plain to the payer and its represented agents. In this regard, this will go a long way in instituting a voluntary compliance culture to the global taxpaying population of the country and in keeping them ‘au fait of what, when, how and where the tax is to be paid.

One of the world’s renowned economist - Adam Smith pronounced that there should be certainty in taxation because uncertainty breeds corruption and could lead to arbitrariness in tax collection and administration. Absolutely, he is right for which the arbitrariness of tax collection could only gain momentum if the taxpaying public resort to the culture of non-compliance. This could trigger the mindset of the people in failing to recognise and understand that government impose taxes on the people based on the ceilings and limits set as taxable income to achieve some specific or general objectives for the common good and benefits of all in the epoch of development, across all sectors of the economy.

Looking at these principles of taxation, one may not understand the rationality on the chargeability of rental income tax. However, the chargeability of rental income is specifically levied on any income received either as residential or on commercial rents, by any resident or non-resident body of person/ persons. This is because it would be vainglory if tax computation and levies are based on force ‘majeure – that is against the wishes of the taxpaying public. Nevertheless, do you pay your rent tax? If the answer is no! Please make sure you validate your rental income accounts and payments forthwith, to avoid the payments of interest and penalties. If the answer is yes, please continue exercising your civic and tax obligatory responsibility in this crusade for our country’s self-sustained development.

A rallying cry of GRA is for all rented property owners, either engaged in residential or commercial rental businesses to come forward, declare and pay the right rental income charged. This is very important because rental income is a potential revenue base and could be a catalyst in enhancing GRA’s drive for optimal domestic revenue mobilisation. Finally, to ensure that rental income tax is given high regards by operators in the business of rental property management and rental services we must all endeavour to play our roles as ‘agents of progress’ in helping GRA achieve its objectives. This will go a long way in instituting the mechanism of a solving mantra to mitigate the incidence and prevalence of inflation, the cost of high rents and cost of living, as a growing cause of concern all and in particularly the poor.

‘The Author is the Senior Compliance Strategy Officer of The Gambia Revenue Authority (GRA)’