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Wednesday, February 23, 2011

Exemption of Duty on Transfer on Property in Kenya

Stamp duty is the a form of tax that is payable pursuant to the Stamp Duty Act (Chapter 480 of the Laws of Kenya). Under the Act, for documents that are liable to be stamped with duty, the requisite rate of duty is supposed to be paid and the documents embossed with duty within 30 days after execution by the parties, and where the documents are being executed abroad, from the the date when the documents are received in Kenya.

Currently, the rate of duty payable on the transfer of property is 4% and 2% for a property within a municipality and outside a municipality respectively. The stamp duty rate is based on the ad valorem value of the property, which is the market value of the property as determined a government valuer following a valuation process. Under the Act, in a sale transaction, the purchaser is liable to pay the stamp duty on the transfer. Stamp duty is also payable where property is being transferred by way of gift inter vivos or for no consideration, and is such a case the transferee or donee is supposed to pay the duty as determined by the collector of stamp duty following a valuation of the property to determine its market value.

The Act also provides some instances where one can be exempted from duty payable on the transfer on property, and these include:

(a) transfer by way of transmission- e.g. pursuant to a will or intestacy;

(b) transfer between husband and a wife;

(c) transfer by way of a gift to a charitable organization as provided for under
section 52(2)(b) of the stamp duty Act;
(d) transfer between associated companies, where one company owns at least 90% of the issued share capital of the other and this is provided for under section 96 of the Stamp Duty Act; and
(e) transfer of a family property to a company whose shares are wholly owned by the family members pursuant to section 106 of the Act and Legal Notice Number 92 of 2007.

In order to qualify for exemption, the applicant should make an application to the collector of stamp duty supported by a statutory declaration or affidavit wherein the applicant will state the section of the Act relied upon in seeking the exemption and attached the requisite supporting documents.

There are other limited instances where duty payable on transfer of property can be exempted and these are provided for in various statutes.

1 comment:

Anonymous said...

I am in the process of registering a company in which i will own 99% while the balance of 1% will also be owned by me through a nominee who is my nephew. I then intend to transfer some real estate property that are currently owned by me to the newly registered company. Will I be required to pay stamp duty?