Tax From Private Land And Share Deals Softens As KRA Faces Ongoing Disputes

By Esther Murigi

The Kenya Revenue Authority (KRA) has been banking on land and private share sales to bring in extra tax revenue. However, the flow of money from these deals has weakened, largely because of court battles and confusion over how much tax should be charged.

In recent years, Kenya has seen an increase in private land sales, especially in Nairobi, Kiambu, Machakos, and other fast-growing towns. Wealthy investors have also been trading company shares behind closed doors. KRA has argued that these transactions should attract higher taxes since they often involve large sums of money.

Although many landowners and investors have resisted, they say most of the tax rules are not clear, and in some cases, KRA  demanded very high payments, leading to a wave of appeals to the authorities and the High Court. Some taxpayers have won temporary relief, making it difficult for KRA to collect the money quickly.

According to figures seen by a local station, capital gains tax collections from land and share deals are below target. While KRA has not released official numbers for this quarter, insiders say revenue is softer than expected. This is a challenge at a time when the government is under pressure to raise money for development projects and repay debts.

Tax experts say part of the problem is how the rules are written. For example, when selling shares in private companies, it is often hard to determine the “true value” of the shares. Buyers and sellers may record lower prices to reduce their tax bills. For land, disagreements arise over whether improvements like fencing and boreholes should be deducted before tax is charged.

The disputes have left KRA walking on a thin line. On the other hand, it wants to meet its revenue targets and show that wealthy Kenyans are paying their fair share. Looking at it differently, aggressive tax demands risk discouraging investment and fueling more court battles.

Observers believe the government may need to review capital gains tax laws to provide clearer guidance. This could reduce the number of disputes and make it easier for both KRA and taxpayers to comply. For now, however, the fight over land and private share tax continues, leaving collections weaker than expected.

The Author is Esther Murigi certified Broadcast Journalist

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