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Economy

Treasury scraps controversial 5pc capital gains tax after rejection

Kenya Revenue Authority commissioner- general John Njiraini  during a previous Press briefing on capital gains tax.  The tax was scrapped on Thursday.  PHOTO | DIANA NGILA
Kenya Revenue Authority commissioner- general John Njiraini during a previous Press briefing. He called on landlords to pay tax on rental income before June 2016. PHOTO | DIANA NGILA 

Treasury secretary Henry Rotich has scrapped the controversial five per cent tax on the gains made from selling shares and instead introduced a 0.3 per cent withholding tax on sales value.

Capital gains tax (CGT) and levies on gambling winnings were introduced in the last financial year but enforcement has proved difficult due to ambiguous laws.

“The implementation of the law has faced some challenges in some sectors of the economy. In order to address these challenges and ensure enforceability and compliance, I propose to remove the five per cent tax on capital gains arising from sale of shares and introduce a 0.3 per cent withholding tax on the transaction value of the shares,” said Mr Rotich.

Resistance by the Kenya Association of Stockbrokers and Investment Banks (Kasib) has made the newly reintroduced tax difficult to enforce.

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