, NAIROBI, Kenya, Dec 11 – Kenya Revenue Authority (KRA) targets to collect Sh7 billion from January to May 2015 from the Capital Gains Tax as its implementation commences on January 1, 2015 after a record 30 years since its suspension.
KRA Commissioner General John Njiraini said the reintroduction of the Capital Gains Tax is a milestone and a clear statement by policy makers of future directions regarding tax mobilisation.
“The truth of the matter is that over the last decade the greatest amount of wealth has been made in the property and capital markets sectors, but we continued to shield those who were making the largest amount of wealth from these two sectors, “he said.
Njiraini said KRA is developing a module within iTax that will allow taxpayers to make electronic declarations as in the cases with other taxes.
He said the iTax declaration process will integrate the Land Registries whey they anticipate that future declarations of stamp duty payments shall be delivered online through the same iTax platform.
The Capital Gains Tax is imposed on gains from transfer by a person of property situated in Kenya at a rate of 5 percent to be paid by the person transferring the property who can either be an individual or a corporate body.
The gain is the excess of the transfer value of the adjusted cost of the property that has been transferred; the excess is what is subject to tax at 5 percent.
The tax should be paid upon transfer of the property by the 20th day of the month after the transfer was made.
The taxpayer will do a self assessment to determine the gain upon which tax is computed, which are subject to commissioners confirmation of correct gain as the basis of tax computation.
On the Extractive Industry a person owing immovable property in the mining and petroleum sector is taxable.
“The applicable rate of tax is as per the Ninth Schedule to the Income Tax Act which is 30 percent for residents and 37.5 percent for non residents with permanent establishment, “explained James Ojee Acting Deputy Commissioner.
Exemptions of Capital Gains Tax include: issuance by a company of its own shares and debentures, transfer of assets between spouses as part of divorce settlement, sale of land by an individual where the proceeds is less than Sh30,000 and compensation by government for property acquired for infrastructure.
Other exemptions include property dealers whose income is taxed as well as sale of agricultural land by individuals outside gazette townships where the property is less than 100 acres among others.