Capital gain tax hike roils stocks
By Nairobi Stocks Review
Stocks in Nairobi tumbled Friday, a day after the Kenyan government announced a sharp increase in the tax applied on profits that investors make when they sell company shares.
The Nairobi All-Share Index, the index that tracks the performance of all company stocks listed on the Nairobi Securities Exchange, fell 0.21% to 150.12 on Friday. The Nairobi 20-Share Index, the index that measures the performance of 20 blue chip stocks in Nairobi, fell 0.52% to 2,706.78 on Friday.
The government more than doubled the so-called capital gain tax to 12.5% from 5.0%. The new rate will start to apply on July 1 when the government’s financial year begins. The hike in capital gain tax means that investors will now pay more taxes on the profit they make when they sell company shares.
But even with the capital gain tax increase, Kenya still offers the best deal for investors. Across the East Africa countries, the capital gain tax ranges between 20% and 30%, meaning that Kenya’s capital gain tax rate is below the regional average.