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Kenya Revenue Authority surpasses target on capital gains tax by 190pc

BUSINESS
By Jackson Omondi Okoth | May 13th 2015

The Kenya Revenue Authority (KRA) says that to date, capital gains tax collections stand at Sh381 million against the revised estimates of Sh200 million. This means that the taxman has exceeded the target by 190 per cent.

This disclosure comes after the Authority disputed media reports alluding to a collection challenge for the capital gains tax after it collected only Sh200 million against a target of Sh 7 billion.

“These reports are considerably inaccurate. The quoted figure of Sh7 billion remains fictitious to KRA as no such target has been set for the current financial year,” said Alice Owuor, commissioner of Domestic Taxes.

KRA said capital gins tax provisions were introduced in the Finance Bill at the committee stage of Parliament and there was thus no explicit target set for the tax in the Estimates of Revenue tabled in June 2014.

Ultimately, KRA expects to exceed the estimates of Sh200 million by a substantial margin this financial year. On the disagreement between KRA and stockbrokers over how to collect the tax, the taxman insists the matter went to court and a ruling was given on March 20, 2015 in KRA’s favour.

“KRA has subsequently written to stockbrokers reminding them of their obligations as per the law vide Commissioner’s letter of April 30, 2015 requiring them to provide information on their trading transactions and to remit required taxes. KRA is following up on this to enforce the law as required,” said Owuor.

Legal action

KRA has a task force in place, which comprises the Capital Markets Authority (CMA), stockbrokers, the Nairobi Securities Exchange (NSE), Central Depository and Settlement Corporation (CDSC), Kenya Bankers Association (KBA) and Kenya Association of Stock Brokers and Investment Banks (Kasib).

The role of the team is to identify implementation challenges and propose solutions and in this regard, has held several meetings. “The efforts of the task force have culminated in proposed legislative amendments to be considered in the current budget cycle,” said Owuor.

KRA warns that failure to collect the tax or ensure compliance as per the tenets of the Finance Act 2014 amounts to tax evasion. Evaders or agents who abet such a crime, risk legal action and the necessary punitive sanctions provided for in the KRA Act.

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