Tax collected from the transfer of property rose 14.25 percent in the year to June, latest reports by the Treasury show, lifted by new regulations that allowed private practitioners to conduct valuation on behalf of the government.
The Kenya Revenue Authority received nearly Sh15.51 billion from sale of land, buildings, and shares in private firms for the year ended June 2021, the latest revenue statistics indicate, compared with Sh13.57 billion the year before.
Tax collected from the transfer of property rose 14.25 percent in the year to June, latest reports by the Treasury show, lifted by new regulations that allowed private practitioners to conduct valuation on behalf of the government.
The Kenya Revenue Authority received nearly Sh15.51 billion from sale of land, buildings, and shares in private firms for the year ended June 2021, the latest revenue statistics indicate, compared with Sh13.57 billion the year before.
Transfer of land, buildings, and unquoted securities such as shares in privately-held companies attracts a five percent capital gains tax paid by a seller on net earnings from the sale, with defaulters slapped with a 20 percent penalty of the tax due.
The buyer, on the other hand, is charged a stamp duty at the rate of four percent of the value of real estate in towns and two percent in rural locations, while rate for unquoted shares is one percent.
The taxes collected from property deals were, however, Sh1.83 billion, or 10.57 percent, short of the Sh17.34 billion that the Treasury had targeted in the review period.
Treasury secretary Ukur Yatani in July 2020 gazetted regulations which for the first time enabled chief government valuer to appoint private practitioners to conduct a property valuation on behalf of the government in a bid to shorten the turnaround time for property deals.
The Stamp Duty (Valuation of Immovable Property) Regulations 2020 give property buyers the option of either using civil servants or hiring an approved valuer.
Shorter turnarounds for valuation were expected to result in higher property taxes — a major source of revenue for the government.
The regulations were part of the reforms aimed at improving Kenya’s global ranking in registering property where the country was positioned a lowly 134 out of 190 countries surveyed in the last World Bank Group’s ‘Ease of Doing Business’ survey for the period ended June 2019.
Closing a property deal took an average of 43.5 days in 10 procedures against a global average of 51.6 days in 6.1 steps in sub-Saharan Africa.
The property market has suffered dipping growth in sales in recent years, surveys by consultancies such as Knight Frank and HassConsult have suggested, a trend which was accelerated by Covid-19 knocks on earnings.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
