Tax receipts from deals in land, houses, and shares in private companies slowed last financial year that ended June 2025, pointing to subdued real estate activity and dwindling investor appetite for private equity deals.
The Kenya Revenue Authority (KRA) received Sh20.98 billion from financial and capital transactions — largely real estate transfers and share sales in unlisted companies — in the review period, compared to Sh20.23billion in the year ended June 2024.
While receipts from capital gains and stamp duty represented a new peak, the 3.71 percent growth rate is the weakest in five years and a steep slowdown from the 13.5 percent jump recorded in the previous financial year.
The charges on net proceeds from real estate and shares in privately-held firms yielded Sh15.51 billion in the year ended June 2021, rising to Sh16.70 billion in the financial year 2021/22 and Sh17.82 billion in 2022/23.
Much of the growth in recent years has been driven by the increased capital gains tax (CGT) rate from 5 five percent to 15 percent in January 2023, while demand for real estate has waned on the back of toughening economic conditions for middle- and upper middle-class households— the drivers of land and house sales.
Findings by realtor HassConsult have, for instance, suggested that average growth in land prices for satellite towns around Nairobi has stagnated in recent years due to the waning demand.
"Periods of economic uncertainty and slowing GDP growth can lead to some developers putting off decisions to acquire land, thus reducing demand, which drives prices higher," HassConsult’s co-chief executive and creative director, Sakina Hassanali, said during an earlier engagement.
"As economic conditions become tougher for the middle and upper middle class, the previously high demand for land in Nairobi's outlying areas, where prices were within reach of private home developers, is waning, leading to lower growth in areas such as Kiserian, Kitengela, Ngong, Ongata Rongai, Juja, and Thika."
Companies and households selling land, buildings, and unquoted securities are subject to 15 percent CGT on net proceeds from the transactions since January 2023.
Buyers are required to pay stamp duty at four percent of property value in major urban areas and two percent in rural regions. For unquoted shares, the duty is one percent.
Defaulters face a 20 percent penalty on the unpaid tax, underscoring the heightened enforcement drive by the taxman.
The transition to tripled CGT rate has not been smooth, with tax administrators still locked in legal battles with a string of high-profile investors and companies it accuses of rushing to complete deals in late 2022 to beat the January 2023 deadline.
Among those facing disputes are firms linked to cosmetics magnate Paul Kinuthia — the founder of the Nice & Lovely brand, which he has since sold to French-owned L'Oréal— textile mogul Jaswinder Bedi and politician Peter Kenneth.
Others include city lawyer Ambrose Rachier, Nairobi investor Amos Gichuki Ngonjo, and a group of shareholders in pharmaceuticals distributor Harleys, which was sold to Mauritian conglomerate IBL Group for Sh3.69 billion.
KRA maintains that CGT is payable when full payment is received, not merely when agreements are signed or transfers lodged.
This interpretation has sparked accusations that some investors underpaid taxes in 2022 for deals that were, in substance, concluded in 2023 — when the higher 15 percent rate applied.
A five-bench Tax Appeals Tribunal late last year added a twist to a long-running legal dispute when it ruled that the due date for payment of CGT is when a property seller receives full payment, not when the transfer is registered.
