Kenya’s property taxes contracted by Ksh. 213 million in the first quarter of the current financial year according to the national treasury.
Property taxes received by the Kenya Revenue Authority (KRA) in the period from July to September this year totaled Ksh. 3.53 billion, a 5.68 percent drop compared to Ksh. 3.75 collected during the same period last year.
The decline has been attributed to a general slump in demand on the back of Covid-19 including pre-Covid 19 economic fractures and consequent income constraints for businesses and individuals.
KRA’s tax cut on property transfer transactions includes a 5 percent capital gains tax charged on net gains payable by the seller and a 4 percent stamp duty on the same property’s market value payable by the buyer.
Rental property is taxable at 10 percent of gross rental income for landlords whose annual rental income exceeds a certain threshold income with an option to opt for ordinary corporate tax.
In Kenya, property taxes form a major component of the government’s revenue streams, with the taxman targeting to raise Ksh. 17.34 billion in the current financial year, a percent increase from the Ksh. 11.71 billion collected in the previous financial year.
Among other measures undertaken by Tresury to increase property revenue include the recent regulations gazettement of regulations allowing the Chief Government valuer to appoint private valuers by Treasury CS Ukur Yattani.
The Stamp Duty (Valuation of Immovable Property) 2020 allows buyers of property the choice to use government valuers or approved private practitioners in transactions.
The move will help the government undertake more property valuations, reducing the routine backlog which is usually responsible for delayed property transfers. These advantages are expected to boost the government’s property tax receipts by the end of this financial year.