Row over capital gains tax collection persists
What you need to know:
- Seesaw plays out between Treasury and traders.
- KRA says brokers or sales agents are supposed to effect it despite teething problems.
The Kenya Revenue Authority on Wednesday maintained that stockbrokers are responsible for the collection of the capital gains tax, even as the Treasury said a meeting would be held on Monday to iron out any differences.
KRA Commissioner-General John Njiraini on Wednesday said that while there were “teething problems”, the law was clear that stockbrokers should collect the tax that came into effect on January 1.
“In respect to stock market transactions, the responsibility to collect and account for capital gains tax lies with the stockbroker or agent handling the sale and transfer of shares or bonds.
“This position is well-articulated in the 8th schedule, Paragraph 18, on which there is no ambiguity whatsoever,” Mr Njiraini said at KRA’s Times Tower headquarters, Nairobi.
Stockbrokers had said they had nothing to do with the new tax, arguing the responsibility rests with individual taxpayers, who should do self-assessments and pay the money to the KRA.
“There is a big misunderstanding in the market that it is the stockbrokers who should be remitting this money. The truth of the matter is that the investor is actually the one supposed to file the returns,” Kenya Association of Stockbrokers and Investment Banks boss Willie Njoroge told the Nation on Monday.
Mr Njiraini, however, said the KRA was ready to continue “intensive engagements” with the capital market players to iron out challenges in implementation.
Speaking at a separate event, Treasury Cabinet Secretary Henry Rotich said he had convened a meeting to be held in his office on Monday to address the concerns raised. The meeting will bring together stockbrokers, NSE and KRA officials.
“Where there are challenges, we will discuss these in the Monday meeting and agree on a way forward… Any changes resulting from the consultative meeting will be incorporated into the Finance Bill which we are already preparing,” Mr Rotich added.
The capital gains tax of five per cent is one of the tools the government is betting on to raise money to meet its budgetary obligations.
