Capital Gains Tax Return (Kenya)

A Capital Gains Tax Return in Kenya reports the figures a taxpayer must declare so the correct liability can be assessed.

Section 3(2)(f) of the Income Tax Act (Cap. 470) includes gains from disposal of investment assets within the scope of income chargeable to tax. The Eighth Schedule to the Income Tax Act defines a 'transfer' broadly to include a sale, exchange, gift, vesting in trust, forfeiture, satisfaction of a debt, or any other disposal of an investment asset. The net gain is calculated as the sale consideration (or market value if the disposal is not at arm's length) less the adjusted cost base — the original acquisition cost plus allowable improvement expenditure, less any depreciation allowances previously claimed.

The Kenya Revenue Authority (KRA) administers CGT through the iTax platform (itax.kra.go.ke). A CGT return must be filed and the tax paid within 5 days of the transfer date — one of the shortest filing deadlines in Kenyan tax law, reflecting the government's priority in capturing revenue from property transactions. The seller, not the buyer, bears the CGT liability. However, Section 35 of the Income Tax Act imposes withholding obligations on certain buyers — particularly companies and registered persons acquiring land and securities from residents — to withhold CGT at source and remit directly to KRA.

Section 20 of the Tax Procedures Act No. 29 of 2015 prescribes interest at 1% per month (compounded) on late CGT payments, and Section 83 provides for penalties of up to 20% of the tax unpaid. The KRA may also pursue criminal prosecution under Section 90 of the Income Tax Act for deliberate tax evasion. Land transfers cannot be registered at the Land Registry under the Land Registration Act No. 3 of 2012 without a CGT clearance certificate issued by KRA confirming the tax has been paid or that the transfer is exempt.

CGT exemptions under the Eighth Schedule to the Income Tax Act (Cap. 470) include the transfer of a principal private residence (the taxpayer's own home) provided the taxpayer has resided there for at least three years; transfers between spouses under the Matrimonial Property Act No. 49 of 2013; transfers by way of donation to approved charitable organisations under Section 10 of the Income Tax Act; and certain corporate reorganisations. The Finance Act 2025 introduced additional provisions relevant to digital assets — transfers of cryptocurrency and other digital assets are treated as disposals of investment assets subject to 15% CGT under the expanded definition in the Eighth Schedule.

A Kenya Capital Gains Tax Return is required by law whenever a person — individual, company, or other entity — transfers an investment asset and realises or is deemed to realise a net gain from that transfer.

A CGT Return is required when an individual sells land or a building in Kenya. Under the Eighth Schedule to the Income Tax Act (Cap. 470), all land and property disposals — whether residential, commercial, or industrial — are chargeable to CGT at 15% of the net gain, unless a specific exemption applies. The CGT Return must be filed and tax paid on the iTax platform within 5 days of the transfer date.

A CGT Return is required when a shareholder sells shares in a Kenyan company — whether a private limited company registered with the Business Registration Service (BRS) or a company listed on the Nairobi Securities Exchange (NSE). Share transfers in private companies are taxed at 15% of the gain. Listed company share disposals are also subject to CGT at 15%, administered via the Central Depository and Settlement Corporation (CDSC) in coordination with KRA.

A CGT Return is required when a business owner in Kenya sells a business as a going concern and the sale price exceeds the adjusted cost of the business assets transferred. The Business Sale Agreement should specify which assets attract CGT — typically goodwill, land, and unlisted shares — and the seller must allocate the total sale consideration between these asset categories for CGT purposes.

A CGT Return is required when a taxpayer disposes of cryptocurrency or other digital assets — following the Finance Act 2025 amendments, digital asset transfers are treated as investment asset disposals under the Eighth Schedule to the Income Tax Act (Cap. 470), with CGT at 15% applying to the net gain.

A CGT Return is required when a non-resident individual or company sells land, shares, or other investment assets located in Kenya. Non-resident sellers are subject to CGT at 15% on Kenyan-source capital gains, with the buyer required to withhold the tax under Section 35 of the Income Tax Act where the seller fails to file and pay independently.

A CGT Return may also be required when an asset is transferred at below-market value — for example, as a gift to a family member other than a spouse — as the Eighth Schedule deems the disposal to occur at market value, triggering a CGT liability even where no cash is received.

A Kenya Capital Gains Tax Return filed with the Kenya Revenue Authority (KRA) via the iTax platform under the Income Tax Act (Cap. 470) and the Finance Act 2023 must include the following essential information to be complete and accurate.

Transferor Details: Full legal name, KRA PIN, National Identity Card (NIC) number (for individuals) or BRS registration number (for companies), residential or registered address, and contact details. If the transferor is a non-resident, the KRA PIN obtained for the purposes of the transaction and the passport number are required.

Asset Description: A clear description of the investment asset transferred — for land and buildings, the land reference number (LR No.) or plot number, physical address, county, sub-county, and the registered area in square metres or acres as stated on the title deed. For shares, the name of the company, BRS registration number, class of shares, and number of shares transferred.

Transfer Date: The date on which the transfer was effected — for land, the date of execution of the transfer instrument; for shares, the date of execution of the share transfer form. The 5-day filing and payment deadline runs from this date under the Eighth Schedule to the Income Tax Act (Cap. 470).

Transfer Consideration: The sale price agreed between the parties in KES. Where the transfer is not at arm's length — for example, between related parties — the consideration is deemed to be the market value of the asset as determined by a government valuer from the Ministry of Lands or an independent IQSK-registered valuer.

Cost Base: The original acquisition cost of the asset (purchase price paid, plus stamp duty, professional fees, and registration costs at time of acquisition), plus allowable improvement expenditure (capital improvements, not repairs), less any depreciation previously allowed. Documentary evidence — purchase agreements, receipts, and KRA payment confirmations from prior stamp duty payments — must be retained to support the cost base.

Net Gain Calculation: Sale consideration minus cost base equals the chargeable gain. Where the asset was acquired before 1 January 2015 (when CGT was reintroduced), the cost base may be the market value on 1 January 2015 as the deemed acquisition date.

CGT Liability: Net gain multiplied by 15% equals the CGT payable. The CGT amount in KES must be paid to KRA through the iTax payment registration number (PRN) generated by the system, via M-Pesa Paybill, bank transfer, or Kenya Commercial Bank (KCB) branch payment, within 5 days of the transfer date.

Exemption Claim: Where the transfer qualifies for an exemption under the Eighth Schedule — principal private residence exemption, spouse transfer under the Matrimonial Property Act No. 49 of 2013, or approved charitable donation — the basis of the exemption must be declared on the return with supporting documentation.

CGT Clearance Certificate: After successful filing and payment, KRA issues a CGT Clearance Certificate confirming the tax has been settled. The Land Registry under the Land Registration Act No. 3 of 2012 will not register a land transfer without this certificate. The forms-legal.com Capital Gains Tax Return template guides Kenyan taxpayers through the data collection and calculation required before logging on to the KRA iTax portal to file the return. Taxpayers with complex capital gains calculations — involving improvement costs, prior depreciation, foreign currency transactions, or corporate reorganisations — should engage a Certified Public Accountant (CPA) registered with the Institute of Certified Public Accountants of Kenya (ICPAK) to prepare and file the return.