Kenya Revenue Authority has moved Capital Gain Tax (CGT) administration to a digital system to minimize incidences of tax avoidance. The government agency intends to increase its Capital gains tax collection through the I-tax system.
The digital system will enhance KRA’s capacity to verify and approve exemptions on CGT. The revenue collection body will accept or deny the exemptions based on the stipulations of the Income Tax Act.
The Deputy Commissioner Elizabeth Meyo noted 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 bearing fruits. Within the first month of implementation, the authority collected Ksh580 million against a target of Ksh391 million.
CGT revenues will soar even higher if parliament approves the revision of Capital Gains Tax rate from 5% to 12.5%.
In the budget statement, Henry Rotich justified the proposal sayings “…there is a need to review the Capital Gains Tax legislation to enhance equity and fairness.” Furthermore, the revision will harmonize the rate with other jurisdictions in the EAC where the rate ranges from 20% to 30%.
KRA aims to increase efficiency and transparency in the collection of the tax. The government agency is optimistic that the new enhancements and the tax revisions effective October 1, 2019, will help the authority realize more revenues.
