A Look at the Stamp Duty Rates in Nairobi, Kenya in 2021

 

There are various transactions carried out in any particular country or state – however, out of all of those transactions, fees and rent on land contributes the most to revenue generated by the government. Other charges or taxes include railway development levy, excise duty, import duty, and catering levy, among other things.

In this article, we take a closer look at one of such charges, which is stamp duty, particularly the stamp duty rates in Nairobi, Kenya, as of 2021.

Stamp Duty Act of Kenya

Stamp duty refers to the charge or tax levied on certain transactions such as stocks, shares, and transfer of properties. Stamp duty is one of the primary sources of revenue for the Kenyan government and these rates are determined by Kenya’s Ministry of Land. It includes a physical revenue stamp that is impressed upon the relevant document in order to prove the legality of the transaction. However, in recent times, many places do not require an actual stamp for the stamp duty and other means are used for the same. 

As per the Stamp Duty Act of Kenya, whenever you purchase a property, it is mandatory to pay a fee or revenue to the government. It may help to have a lawyer during the process as that would ensure smoothness of the transaction and also uphold its integrity. 

The stamp duty needs to be paid and the document needs to be signed within 30 days of the acquisition of your purchase. Failing to pay the required amount is considered a criminal offence under Kenyan law. 

Stamp Duty Rates in Nairobi, Kenya – 2021

Stamp duty rates are based on the value of the transaction or are nominal rates on financial exchanges or instruments, as discussed below.

• Stamp duty of four per cent is levied on the transfer of land in towns.
• Stamp duty of two per cent is levied on the transfer of land in the rural areas. 
• A stamp duty of one per cent is charged when increasing the share capital of a company. 
• Stamp duty of 0.05 per cent is charged when registering debentures or mortgages for collateral securities. 
• Properties on lease are charged with a stamp duty of one per cent for the annual rents for three years. After three years, the stamp duty comes to two per cent on the yearly rent. 

There are also times when stamp duty charge is not levied, such as:

• When a company is being registered for very nominal share capital.
• When transferring shares in companies registered under the Nairobi Securities Exchange.
• During Sukuk arrangements or transactions.
• Transfer of houses under the affordable housing scheme.

Kenya Stamp Duty Forms

13 years ago, The Kenya Revenue Authority took over the collection of stamp duty within the country, they have certain guidelines on the handling of stamp duty forms. Some of these guidelines include:

• All forms are completed via the Ministry of Housing and Lands. 
• The quadruplicate is received after the relevant documents are presented. This is what gets the stamp duty. 
• The quadruplicate is handled by an agent, advocate, or duty payer. It is either taken to a National Bank or Kenya Commercial Bank for payment.

After the above-mentioned steps have been completed, this follows:

• The original copy of the payment form is retained by the individual who is carrying out the presentation.
• The quadruplicate is yellow in colour and remains in the bank. The triplicate is green in colour and is forwarded to the registrar of titles and lands. 
• The duplicate is blue in colour and is forwarded to the Commissioner of Domestic Taxes by the bank. 
• The original white copy remains with the duty payer. 

Each valuation of stamp duty is done before a collector starts endorsing a property. 

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