Kenya Capital Gains Tax Guide 2026

CGT Rate — 5% Flat

Capital gains tax in Kenya is charged at a flat rate of 5% of the net gain realised on the transfer of property situated in Kenya, whether the transferor is resident or non-resident. The rate was reduced from 10% to 5% under the Finance Act 2023. CGT is a final tax — the gain is not included in the taxpayer's ordinary income for PAYE or CIT purposes. The tax applies to both individuals and companies. For non-residents, CGT applies only to gains from the transfer of assets located in Kenya.

Asset Types Covered

CGT applies to the transfer of the following categories of assets:

• Real property (land and buildings): All transfers of land and buildings in Kenya, including sale, exchange, and transfer of beneficial interest.
• Shares in private companies: Transfer of shares in companies that own land in Kenya (known as "land-rich companies") is treated as a transfer of land and subject to CGT.
• NSE-listed shares (pre-listing): Shares acquired before a company's listing on the NSE and transferred within 3 years of listing are subject to CGT on the gain.
• Goodwill and intellectual property: Transfers of business goodwill and IP registered in Kenya are subject to CGT.

Exemptions

Key exemptions from CGT in Kenya include:

• Primary residence: Gains from the sale of an individual's principal residence are exempt, provided the property was used as the main home and the gain does not exceed KES 3 million.
• NSE secondary market trades: Shares traded on the Nairobi Securities Exchange secondary market are exempt from CGT.
• Small businesses: Assets of a business with annual turnover below KES 5 million are exempt.
• Movable personal property: Gains from the sale of personal effects, vehicles, and household goods are generally exempt.
• EPZ/SEZ transfers: Asset transfers within EPZ/SEZ are exempt for the first 10 years.

Calculation of Gain

The capital gain is calculated as: Transfer value − (Adjusted cost base + Incidental costs). The adjusted cost base includes the original purchase price plus capital improvements. Incidental costs include legal fees, valuation fees, agent commissions, and stamp duty paid on acquisition. No indexation is available to adjust the cost base for inflation. Losses on capital assets may be offset only against capital gains in the same year; unused losses cannot be carried forward.

Filing and Payment

The CGT return must be filed via iTax within 30 days of the transfer date. Payment is due on filing. The transferor is primarily responsible for the tax, but the transferee (buyer) is required to deduct CGT from the purchase price and remit it to KRA if the seller is a non-resident. KRA may issue a clearance certificate confirming that CGT has been paid before the transfer can be registered at the Ministry of Lands. Late filing attracts a penalty of KES 10,000 or 5% of the tax due (whichever is higher), plus interest at 1% per month.

FAQs

Is CGT payable on inherited property when the heir sells it?

Yes, when the heir sells inherited property, CGT is payable on the gain calculated from the original owner's cost base (no step-up in basis).

Do non-residents pay CGT on Kenyan property?

Yes, non-residents are subject to CGT at 5% on gains from the transfer of assets located in Kenya. The buyer must withhold the tax from the purchase price and remit it to KRA.

How is CGT on shares in private companies calculated?

For shares in private companies, the gain is the difference between the sale price and the acquisition cost. If the company owns land, the transfer may be treated as a land transfer. Valuation by KRA may be required for non-arm's length transactions.

What happens if CGT is not paid within 30 days?

Late payment attracts interest at 1% per month on the unpaid tax. KRA may issue an agency notice to the buyer's bank or property to recover the tax. The land registry may refuse to register the transfer without a CGT clearance certificate.

Disclaimer

This guide provides general information about Kenyan capital gains tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Kenyan tax advisor or the Kenya Revenue Authority for advice specific to your situation. InvestmentKit does not provide tax advice.