Private Equity investors want the capital gains tax to remain unchanged at 5% and not the 12% that had been proposed in the finance bill 2019.
The East African Venture Capital Association ( EAVCA) Executive Director, Eva Warigia stated that the proposed capital gain tax will put off investors. Private equity funds are key in supporting investments in the country. Kenya needs to minimize capital gain taxation to be an attractive investment destination.
The National Treasury had proposed an increase in capital gain tax to 12% in order to raise more revenues from investors.
The Capital Markets Authority supports the Private Equity sector. The regulator has assured the investors that it will create a conducive environment for private equity funds to be invested.
The Capital Gain Tax proposed bill comes at a period where Private Equity firms are seeking more funds from regional pension schemes.
The Retirement Benefits Authority stated that the country has had regulations that support the diversification of pension funds but most pension schemes largely invest in bonds and stocks.
EAVCA, Financial Sector Deepening Africa (FSD Africa) and the International Finance Corporation (IFC) partnered to unveil an investment guide that will help pension schemes to invest in Private Equity Funds.
RBA Chief Executive Officer stated that the investment guide is vital as it will bridge the knowledge gap on investing in private equity. The uptake of private equity investments has been very low among local pension firms.
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