Revenue agency targets Sh20b from lucrative capital gains tax

Namanga one-stop border post, October 17, 2020. [Collins Kweyu, Standard] The Kenya Revenue Authority (KRA) is targeting to collect Sh20 billion this financial year following the implementation of the 10 per cent increase in the capital gains tax which took effect this month. The capital gains tax was increased to 15 per cent in the 2022/23 financial year from five per cent which has been in effect since 2015. The increase in the tax is an attempt by the government to tax the wealthy as it affects those who transfer properties with the exception of those who are not deemed to be seeking any gain. For example, the transfer of a piece of land to an immediate family member or for the purpose of securing a loan is exempted. If you are transferring an asset from your name to a company where you are a 100 per cent shareholder, you will also be exempted. Capital gains tax also affects the transfer of shares that are not traded on the Nairobi Securities Exchange (NSE). A breakdown shared with Standard Business by KRA Team Lead Digital Service Tax Nickson Omondi shows that in the last four years, the taxman has collected an average of Sh5 billion every year from the capital gains tax. This includes Sh5 billion in 2019, Sh4 billion in 2020, Sh5 billion in 2021 and Sh7 billion in 2022. "December alone (2022) accounted for over Sh3 billion," he said. Mr Omondi explained that the increase to Sh7 billion in 2022 was a result of KRA's intervention in the transfer process for land which would not allow one to proceed to pay stamp duty before clearing with them. "That might be one of the reasons but, of course, there are other underlying economic factors," he said. Mr Omondi noted that with the rollout of the increased tax on capital gains, the taxman expects to collect thrice the 2022 figures even as he insisted that the 15 per cent levy is lower when compared to the rest of the East African Community (EAC) member states. He gave an example of Uganda which charges 30 per cent. Capital gains tax is levied on the 'profit' one gets when disposing of property which is done through the transfer of ownership. For example, if you were gifted unquoted shares (shares not trading under NSE) or a parcel of land some years back and you choose to sell it, KRA requires you to pay 15 per cent of your net profit at the time you are disposing of. For land, however, the threshold value is Sh3 million and above. Mr Omondi said there are individuals who make money by selling such properties and it is only right they pay their fair share. He noted that the 15 per cent levy is still below 30 per cent when compared to income tax or Pay As You Earn for the employed. "Taxes are ploughed back into the economy. Without taxes, we cannot see good roads and that cycle needs to be sustained," said Mr Omondi.

Revenue agency targets Sh20b from lucrative capital gains tax

Get Full Access for Ksh299/Week.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS

Similar Articles

Africa banks on continental trade agreement to rev up investments

How 300 containers were stolen from Mombasa port

800 youth benefit from 'Glam on Wheels' Initiative

Flower industry loses Sh200m as transport strike hits JKIA cargo

DIGGER JOBS

Digger Motors

Digger Real Estate

Revenue agency targets Sh20b from lucrative capital gains tax

Get Full Access for Ksh299/Week.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS