The Ministry of Lands will now be responsible for the collection of stamp duty paid for land transactions as the Kenya Revenue Authority (KRA) relinquishes another revenue-collecting role.
This comes after the KRA and the Lands Ministry issued a joint public notice announcing the latest development that will see the latter start collecting stamp duty.
“In order to make the payment of stamp duty for land transactions a seamless process, the Kenya Revenue Authority has now made it possible for the public to make payments at the State Department for Lands and Physical Planning,” reads the public notice.
“From November 27, 2023, all payments for land transactions attracting stamp duty shall be made to the State Department for Lands and Physical Planning through the e-Citizen via pay bill number 222222. Further payment instructions are available when clients click ‘PAY’ on the Ardhisasa platform,” added the notice. This comes amid a push by the government to have all revenues collected through a single pay bill.
This is the second in under four months after the KRA also lost the mandate for the collection of aviation fees.
Currently, the stamp duty payable at the commissioner for domestic taxes is four percent of the property value for urban lands and two percent for rural lands.
“I think this is centralizing revenue collection. Ardhi Sasa is under Land and it appears KRA will no longer be collecting the stamp duty,” noted Robert Waruiru, a partner at Ichiban Tax & Business Advisory LLP.
Nick Abidha, a city lawyer, welcomed the move noting that “the current online system is a big mess.”
However, there are those who argue that the link between capital gains tax, a levy investors pay on the profits — or gain — made when they sell, give away or dispose of an asset, such as shares or property like homes and land.
“I wonder what becomes of the link between stamp duty and capital gains for the seller?” wondered Waruiru.
Starting in October 2016, those transferring land were required to make simultaneous payments of both the stamp duty and the Capital Gains Tax on the i-Tax portal.
However, the KRA discontinued this in 2020 with those transferring land no longer required to present a Capital Gains Acknowledgement slip before stamp duty payment can be processed.
In the current financial year ending June 2024, the government has projected it will collect stamp duty of Sh9.53 billion. This is expected to more than double to Sh19.8 billion in the Financial Year starting July next year.
President William Ruto last year announced plans to exempt first-time home buyers from paying stamp duty in a bid to ease house ownership costs among workers battling the rising cost of living amid largely stagnant pay.
Dr Ruto said his administration would seek to strike a revenue balance by removing stamp duty for first-time homeowners and raising compliance for other property-related levies like land rates and rent.
Currently, the exemption from stamp duty applies to first-time homebuyers of approved affordable housing units following changes to the law made by the previous administration of Uhuru Kenyatta.
Other exemptions from stamp duty include transfer to charitable organisations as gifts, transfer of property between spouses and transfer of property to the members on the demise of the family in whose name the property was registered.