Attorney-General Githu Muigai holds that the tax was implemented for a legitimate reason of sealing loopholes allowing individuals to use the exchange to evade tax. PHOTO | FILE
The Attorney-General has backed Kenya Revenue Authority defence of the capital gains tax (CGT), arguing brokers oppose the levy based on misconception of its supporting laws.
Prof Githu Muigai, responding to a petition filed by stockbrokers against the tax, said it was not based on any empirical incident and only demonstrated apprehension based on individual beliefs.
The Kenya Association of Stockbrokers and Investment Bankers (Kasib) filed the petition on re-introduction of the levy after a 30-year hiatus.
Kasib claimed the capital gains tax would drive away tax-shy investors from the Nairobi Securities Exchange.
The AG wants the court to throw out the petition, as he holds that the tax was implemented for a legitimate reason of sealing loopholes allowing individuals to use the exchange to evade tax.
“The entire petition is premised on Kasib’s opinions, which are not supported by any empirical evidence. The statutory provisions in issue have not been proved to be unconstitutional. There is no contradiction or ambiguity in the provisions of the laws in issue,” the AG said.
Kasib had blamed the provisions of the Finance Act regulating the implementation of the tax, as it claimed the amount to be taxed was ambiguous. While sections provide for a five per cent deduction, others put the rate at seven per cent.
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