This archive report was first published on 16 October 2019.
Kenya's private equity sector is facing a potential setback as investors push back against a proposed increase in capital gains tax from 5% to 12%.
According to the East African Venture Capital Association (EAVCA), the proposed tax hike will make Kenya a less attractive destination for investment, particularly from regional pension schemes.
Executive Director Eva Warigia stated that private equity funds are crucial for supporting investments in the country, and that minimizing capital gain taxation is essential to remain competitive.
The National Treasury had proposed the tax increase to raise more revenues from investors, but the move has been met with resistance from the private equity sector.
The Capital Markets Authority has assured investors that it will create a conducive environment for private equity funds to be invested, and has partnered with EAVCA and the International Finance Corporation (IFC) to unveil an investment guide to help pension schemes invest in private equity funds.
The guide aims to bridge the knowledge gap on investing in private equity, which has been a barrier to uptake among local pension firms.
As Kenya seeks to attract more private equity investments, the proposed tax hike has raised concerns about the country's competitiveness in the region.
Published on October 16, 2019.
