Treasury Secretary Henry Rotich in his budget reading on 13th June, 2019 proposed to have Kenya’s Capital Gains Tax (CGT) increased from 5% to 12.5%.
Mr. Rotich said that the proposal was meant to harmonize the rate of CGT with other jurisdictions.
If approved by Parliament, the proposal will see property owners pay CGT at the rate of 12.5% on the gain which accrues to a company or an individual, on the transfer of property situated in Kenya.
Therefore, what constitutes a transfer of property?
Paragraph 6 (1) of 8th schedule of the Income Tax Act provides that a transfer takes place: –
- where a property is sold, exchanged, conveyed or disposed of in any manner (including by way of gift whether or not for consideration); or
- on the occasion of loss, destruction or extinction of property whether or not compensation is received; or
- on the abandonment, surrender, cancellation or forfeiture of, or the expiration of rights to property.