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Capital Gains Tax (CGT) in Kenya

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Capital Gains Tax (CGT) in Kenya
What constitutes a transfer?
What is the due date/tax point?
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What is Capital Tax (CGT)

Capital Gains Tax (CGT) is a tax chargeable on the whole of a gain which accrues to a company or an individual on or after 1st January, 2015 on the transfer of property situated in Kenya, whether or not the property was acquired before 1st January, 2015.

It is not a new tax. It was suspended in 1985 and has now been re-introduced effective 1st January, 2015.The rate of tax is 5% of the net gain. It is a final tax and cannot be offset against other income taxes.


Who is liable to pay the tax?

The tax is to be paid by the person (resident or non-resident) transferring the property, that is, the transferor. The transferor can either be an individual or a corporate body.



What constitutes a transfer?

A transfer takes place: -

a) where a property is sold, exchanged, conveyed or disposed of in any manner (including by way of gift); or

b) on the occasion of loss, destruction or extinction of property whether or not compensation is received; or

c) On the abandonment, surrender, cancellation or forfeiture of, or the expiration of rights to property.




What is the due date/tax point?

It is a transaction based tax and should therefore be paid on or before the date of lodgment of application for transfer to the relevant Lands Office but not later than the 20th day of the month following that in which the transfer was made. What is property? Property is defined in the law (Eighth Schedule to the Income Tax Act). It includes land, buildings and securities.


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