Treasury to abolish stamp duty soon

By Morris Aron

Treasury is considering repealing the payment of stamp duty in the next financial year, to reduce cost of secure lending and ease transactions in real estate.

Finance PS Joseph Kinyua Wednesday said negotiations were ongoing about a different tax regime that will make it easier to transact or transfer property as opposed to the current stamp duty.

"Payment of stamp duty and a number of contradicting regulations have been a major concern," he said.

Analysts say change of stamp duty tax regime will usher in low interest rate pricing, larger amounts and longer repayment periods for secured loans due to reduction in costs.

CBK on Reforms

The announcement comes at a time when the Central Bank of Kenya has formed a committee to spearhead reforms on how borrowers use collateral to secure credit.

Both decisions come at a time when Financial Sector Deepening Trust has released a report that faults the laws and regulations governing collateral as security against loans.

The report released yesterday, "Costs of collateral in Kenya: Opportunities for reform," identifies bottlenecks in the collateral process and recommends the abolishment of stamp duty—averaging at four per cent of the value of the property being offered as collateral or being sold.

The report says in the current system one has to go through 20 legal statutes—five on land—making the procedure cumbersome to the borrower.