KRA exempts Stanlib REIT investors from tax

 Investors in the STANLIB Fahari I-REIT, which is currently on sale through an initial public offering (IPO), will not have to pay tax on their earnings.

This follows a declaration by the Kenya Revenue Authority (KRA).

According to a letter to the investment company dated November 10, 2015, KRA said that STANLIB’s application had been evaluated to finality and approved for the issuance of a tax exemption certificate.

The tax exemption comes a few days after the Capital Markets Authority (CMA) approved the extension of the I-REIT’s selling window to November 18, to give more time to both corporate and retail investors to participate in the region’s first I-REIT.

Commenting on KRA’s approval of the tax exemption application, STANLIB’s Regional Director, James Muratha said:

“As a tax efficient vehicle, the STANLIB Fahari I-REIT will provide Kenyans with an opportunity not only to diversify their investment but also open up the lucrative real estate sector to those who hitherto would not have access to it.

“With the tax exemption, the STANLIB Fahari I-REIT is now an even better proposition for investors,” said Mr Muratha.

The tax exemption is in line with the Government’s policy of deepening the capital markets and enabling financial inclusion for a wider segment of the population, beyond the elite.

Mr Muratha lauded key organs of Government including the National Treasury, CMA, Retirement Benefits Authority, KRA and market operator Nairobi Securities Exchange (NSE) for their commitment to deepening the capital markets and financial inclusiveness.

The listing date for the STANLIB Fahari I-REIT on the Nairobi Securities Exchange (NSE) will be November 26, 2015. The STANLIB Fahari I-REIT allows investors to own a slice of the lucrative real estate segment and will be listed on the NSE under the recently launched Real Estate Investment Trusts Market segment.

An I-REIT is a collective investment vehicle that allows investors to pool capital, which is then invested in a portfolio of selected income generating properties for a return. Investors gain through capital appreciation and rental income, with the latter being distributed to unit-holders annually. The income earned by the I-REIT is also not subject to taxation.

Units of the STANLIB Fahari I-REIT are selling for Sh20 for a minimum of 1,000 units, which translates into a minimum investment of Sh20,000.