This archive report was first published on 27 August 2019.
Kenya Revenue Authority has taken a significant step in combating tax avoidance by migrating its Capital Gain Tax administration to a digital system. The move aims to increase efficiency and transparency in tax collection, with the authority optimistic that the new system will help realize more revenues.
The digital system will enable the authority to verify and approve exemptions on Capital Gains Tax more effectively, with the Deputy Commissioner Elizabeth Meyo noting that “Through the system enhancement, all property transfer transactions declared as exempt from Capital Gains Tax will go through a verification and approval process. This process will regulate exemptions declarations by the transacting parties”.
Capital Gains Tax administration on iTax is already showing promising results, with the authority collecting Ksh580 million in its first month of implementation, exceeding its target of Ksh391 million. The move is expected to yield even higher revenues if parliament approves the revision of Capital Gains Tax rate from 5% to 12.5%, as proposed in the budget statement.
Finance Cabinet Secretary Henry Rotich justified the proposal, stating “…there is a need to review the Capital Gains Tax legislation to enhance equity and fairness.” The revision will also harmonize the rate with other jurisdictions in the EAC, where the rate ranges from 20% to 30%.
Published on August 27, 2019.
