Kenya revenue Authority (KRA) has said it has no plans to stall implementation of Capital gains tax (CGT) as it commits to engage players to iron out steamy issues in a law that is turning out controversial.
Among the key issues turning heat to the implementation process is whether Stock brokers who have taken a back seat are required to collect the tax on behalf of KRA.
Stock brokers earlier in the week said they are not obliged to, but the authority affirmed agents would be liable if they fail to remit the tax on sale and transfer of shares they handle.
“Their( stock brokers) responsibility to collect and account for CGT is well articulated in the 8th schedule, paragraph 18 of the income tax Act which there is no ambiguity whatsoever,” said KRA commissioner General, John Njiraini.
The Taxman yesterday affirmed it shall continue intensive engagements with capital market players to address pending concerns that have started eliciting tough debate.
“We have issued the revised guidelines to capital markets regulator, Nairobi securities Exchange and Association of stock brokers for clarity and reference prices to be used in each transaction. Any points of pain or uncertainty will be ironed out in the coming days,” he said.
The law charges five percent of all transactions including property prices, construction costs and those realized from sale of bonds and stocks.
ABC Bank corporate advisory services Manager, Johnson Nderi has predicted dark clouds over performance of the stock market citing uncertainty and high charges on transaction of deals.
“Looking at the market, 2015 should see poorer performance in the stock market because of higher cost of capital thanks to CGT. However, lower inflation might help (if it stays low) but fiscal policy is likely to hurt in that cause,” said Nderi.
National treasury re-introduced the tax after it was suspended in 19 to help the government meet its Sh 1.8 trillion budget that has put more money on infrastructure and social spending.