THE Treasury does not see the re-introduction of the capital gains tax within the next six months, an announcement that may calm nerves among real estate investors and the capital markets.
Treasury economic secretary Geoffrey Mwau said yesterday no firm decision has been made so far over what classes of assets will be taxed under the new tax.
National Treasury cabinet secretary Henry Rotich said during the budget speech last week the government will re-introduce the capital gains tax and impose withholding tax on winnings from gaming and betting.
The capital gains tax was abolished in 1985 to spur investments in properties and securities, but these sectors have grown significantly compared to three decades ago.
This means the taxman will take his share whenever land, houses, stocks, bonds and other marketable assets change hands.
This pronouncement has created apprehension among real real estate players as well as investors at the stock exchange. But Mwau said there is no reason for alarm at the moment.
"We have not even worked out the areas to be taxed," Mwau said adding that there would be wide consultation before the right legislation to allow for the tax are put in place.
The Kenya Revenue Authority in April said the absence of regulation was the only hurdle locking it out of capital gains tax. Property sellers, for instance, only pay a Stamp Duty of up to four per cent when transferring to new owners.
KRA could not immediately give the estimated revenues gains these two tax measures will add. Rotich said the total revenue estimates for 2013/14 is Sh1.03 trillion, comprising Sh961.3 billion in ordinary revenue and Sh67 billion in aid appropriations.
