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Kenya Confirms Capital Gains Tax Arrangements

by Lorys Charalambous, Tax-News.com, Cyprus

30 July 2015


Kenya has clarified forthcoming changes that will replace the nation's capital gains tax with a new withholding tax for securities trading activities.

Currently, CGT is imposed on the sale of listed securities at five percent of the net gain. This tax is collected and accounted for by stockbrokers on behalf of their clients and is payable not later than the 20th day of the month following that in which the transfer was made.

Stockbrokers had protested against having to administer the CGT, pointing out the difficulties of ascertaining and verifying the purchase prices of their clients' shares.

The 2015 Finance Bill proposed the introduction of a 0.3 percent WHT based on the gross transaction value of the sale of a listed security, with effect from January 1, 2016. It is intended that this will replace the current five percent CGT.

According to a new public notice issued by the Kenya Revenue Authority, under the new WHT, stockbrokers will now be responsible only for collecting the withholding tax and remitting the revenue to the KRA.

The KRA has reminded taxpayers that the rate of CGT on the transfer of real property and private/unlisted securities will remain at five percent of the net gain and should be accounted for by the transferor.

TAGS: capital gains tax (CGT) | tax | investment | real-estate investment | capital markets | real-estate | equity investment | tax authority | tax rates | withholding tax | Kenya

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