Wazua
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The Capital Gains Tax
Rank: New-farer Joined: 12/16/2013 Posts: 49 Location: Nairobi
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I see the issue of the re-introduction of the Capital Gains Tax is gathering momentum. Read: http://www.businessdaily.../-/hk597qz/-/index.html
According to this report http://www.globalpropert...ganda/capital-gains-tax
by the Global Property guide, South Africa charges a CGT OF 40%, while Uganda is at 30% . Nigeria and Ghana charge a CGT of 10%. I think its about time the government sought to widen its tax base and with the gains made at the bourse this year why not pay 2% tax or 0.2% stamp duty. I also think an assertion that CGT will ruin the bull run is flawed. I had this to say about Capital Gains Tax in my blog : http://themarkettrends.w...x-in-kenya-my-two-cents/"'Nowadays people know the price of everything and the value of nothing.' - Oscar Wilde.
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Rank: Member Joined: 9/14/2011 Posts: 834 Location: nairobi
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Any treasury insiders, please help us. When is this tax likely to be introduced
Hope we are not caught napping
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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The big question re: Capital Gains Tax ... What will be used as the BASIS. Suppose the Tax is in effect as of 1 Jan 2014. The price of Britam was 12/- and is 18/- today. It was bought at 9/- in 2011. Will the tax be assessed on Shs 6? [18-12]? Will it be assessed in Shs 8? [18-9]? What if one has borrowed money [at 20%] to buy shares therefore the interest cost since 2011 is almost Shs 6 [20% annually x 3 years compounded]? I fear as is usual with KRA, there will be so many ambiguities that the officers will be out to look for blood [corruption]. There has been no piece of Tax Legislation in Kenya that has been clearly written. The KRA does NOT want clarity since it allows them to impose their own version. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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I also wonder who will monitor the millions of transactions when you bought and when you sold and your gains... "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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mlennyma wrote:I also wonder who will monitor the millions of transactions when you bought and when you sold and your gains... That is solely the bourse,s mandate.... possunt quia posse videntur
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Rank: Member Joined: 1/13/2014 Posts: 386 Location: Denmark
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VituVingiSana wrote:The big question re: Capital Gains Tax ... What will be used as the BASIS.
Suppose the Tax is in effect as of 1 Jan 2014. The price of Britam was 12/- and is 18/- today. It was bought at 9/- in 2011.
Will the tax be assessed on Shs 6? [18-12]?
Will it be assessed in Shs 8? [18-9]?
What if one has borrowed money [at 20%] to buy shares therefore the interest cost since 2011 is almost Shs 6 [20% annually x 3 years compounded]?
I fear as is usual with KRA, there will be so many ambiguities that the officers will be out to look for blood [corruption]. There has been no piece of Tax Legislation in Kenya that has been clearly written. The KRA does NOT want clarity since it allows them to impose their own version.
I would also want to know how they will treat any losses incurred. Seeing is believing
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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I thought Rotich made it very clear last year that CGT would not apply to the NSE?! Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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guru267 wrote:I thought Rotich made it very clear last year that CGT would not apply to the NSE?! CGT for equities is definitely coming. It was part of the ECFs terms fronted by IMF in 2011 as treasury begged for USD float to save KES. NSE demutualization was an ECF item as well as that global VAT change and they've been implemented...
As @vvs points out the issue is how it gets rolled out. KRA won't focus on wanjiku as much, but fund managers/big funds etc will be their honey pot since they hold both large equity and real estate docket...
http://mobile.nation.co....-/11wegbrz/-/index.html
So what happens to REITS?
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Might as well declare the NIFC, Kenya Vision 2030 D.O.A i.e Zambia Finance bank looks at listing on Nairobi stock exchange by End of Year http://www.coastweek.com...urg-stock-exchanges.htm
On the flip, the (Zim) ZSE lowered transaction fees recently, 2. has been running mock runs for CSD (CDS) in preparation for automation, 3. proceeded with demutualization too, 4. minimum capital for asset managers has been lowered to USD250K from USD500K. We can vote.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Finance Bill 2014 effectively introduces capital gains but in the Oil and Mining industries. HereIsAWriteUpOnTheSuspendedCGTProvisionsLife is short. Live passionately.
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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If KRA/GoK wants CGT then it needs to plan for it. And educate people on how it will go about it. Then let the brokers and investors go about installing systems to account for the gains/losses. A sudden introduction will be a disaster. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: New-farer Joined: 3/1/2014 Posts: 82
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Jana the president on devolution said "Hakuna haja ya fufinyilia mwananchi na ku-introduce taxes, si tutumie zile pesa tuko nazo vizuri kwanza?" Then this now? Enyewe the govt. has a way of frustrating its own. “The beauty of success is that it doesn’t matter how many times you have failed, you only have to be right once and then everyone can tell you how lucky you are.” - Mark Cuban
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Rank: Member Joined: 5/9/2014 Posts: 130 Location: Nairobi
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Gavas are usually untrustworthy especially when they are struggling for funds such as our current one, they are looking for all avenues that they can get funds from instead of finding ways to reduce excessive spending.
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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In keeping with the equity principle of taxation, if I sell at a loss I should be eligllible for a tax refund. If so, then there is a mathematical sweet spot where you can sell at a loss and not make a loss!!
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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Business Daily wrote:Parliament Wednesday amended the law to bring back the capital gains tax 36 years after it was abolished.
The new law, which was passed through an amendment to the Finance Bill 2014, sets companies and individuals on the path to paying taxes on the proceeds of property sold beginning January 1, 2015.
Kenya removed capital gains tax from its laws in 1978 hoping to use it to attract investment in its stock market, mining licences and real estate among other sectors.
Members of Parliament Wednesday brought back the tax by amending the Eighth Schedule of the Income Tax Act.
“Subject to this Schedule, income in respect of which tax is chargeable under Section 3(2)(f) is the whole of a gain which accrues to a company or an individual on or after January 1, 2015 on the transfer of property situated in Kenya, whether or not the property was acquired before January 1, 2015,” says Clause 22 of the newly enacted Finance Bill. "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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murchr wrote:Business Daily wrote:Parliament Wednesday amended the law to bring back the capital gains tax 36 years after it was abolished.
The new law, which was passed through an amendment to the Finance Bill 2014, sets companies and individuals on the path to paying taxes on the proceeds of property sold beginning January 1, 2015.
Kenya removed capital gains tax from its laws in 1978 hoping to use it to attract investment in its stock market, mining licences and real estate among other sectors.
Members of Parliament Wednesday brought back the tax by amending the Eighth Schedule of the Income Tax Act.
“Subject to this Schedule, income in respect of which tax is chargeable under Section 3(2)(f) is the whole of a gain which accrues to a company or an individual on or after January 1, 2015 on the transfer of property situated in Kenya, whether or not the property was acquired before January 1, 2015,” says Clause 22 of the newly enacted Finance Bill. Oh my! That soon! Backdated tax to boot without any start date limit?!
If Rea Vipingo case runs past 1-1-2015 the seller suddenly faces a tax bill. How many big ticket property sales will stall in the process? What about foreclosures on mortgage default?
REITS is DOA... A rod in spokes scenario suddenly meets real estate speculation.
These IMF 'great recommendations' are indeed economy 'boosting'...
Aggressive tax collection in an econ slump increases the pain and worsens tax evasion. $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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For some context, its going to be 5%... Sehemu ndio nyumba
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Rank: Member Joined: 1/13/2014 Posts: 386 Location: Denmark
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I thought we were to wait at least until the next budget . shock on me  Seeing is believing
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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It doesnt touch the nse i sell before its effected or what? "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Unfortunately our bloated constitution which created thousands of useless positions will kill this country a slow death.just wait,you wont issue eurobonds forever. "Don't let the fear of losing be greater than the excitement of winning."
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