Property sector hit with 12.5pc tax

Saturday June 15 2019

Kenya has more than doubled the tax rate on gains made from the sale of properties.

Kenya has more than doubled the tax rate on gains made from the sale of properties. PHOTO | FILE | NATION MEDIA GROUP 

JAMES ANYANZWA
By JAMES ANYANZWA
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Kenya has more than doubled the tax rate on gains made from the sale of properties and securities trading off the Nairobi Securities Exchange in a bid to generate more revenue to finance the Ksh2.8 trillion ($28 billion) budget for the 2019/2020 fiscal year.

National Treasury Cabinet Secretary Henry Rotich increased the capital gains tax to 12.5 per cent from five per cent, arguing the move was meant to enhance equity and fairness as well as harmonise the rate with other jurisdictions including East African Community member states where the rate ranges between 20 per cent and 30 per cent

However, the transfer of properties informed by the restructuring of corporate entities has been exempted from the tax.

The properties targeted by this tax include land, buildings and marketable securities.

The increase in the CGT is part of tax policy measures by the Kenyan government to raise a total of Ksh37 billion ($3.7 billion) to finance part of the expanding budgetary spending for the 2019/2020 fiscal year.

The CGT is a final tax applied on the net gains arising from the sale of property and gains made from the transfer of non-listed securities.

Regionally, Tanzania taxes capital gains at the rate of 10 per cent for locals and 20 per cent for foreigners.

Uganda charges CGT of 30 per cent, though the rate varies from 25 per cent to 45 per cent for mining companies based on the profitability of the mine.

Rwanda introduced a CGT of five per cent through the Income Tax Act (2018) while Burundi charges 15 per cent.

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