KENYA Law and Practice Contributed by: Ombo Malumbe, Jack Ong’anya and Faith Ngarama O’Bang Law (Ong’anya Ombo Advocates LLP)
erty will not apply when the title is being transferred to a registered family trust, as this is a recognised tax- exempt “rollover for wealth preservation”. It is important to note that now, taxpayers are disal - lowed to deduct any capital loss realised against any future capital gains. This places a burden on taxpay - ers, who will be required to pay CGT on the sale of property that results in a gain, even though such a transaction might have incurred significant capital loss. 2.8 Other Taxes on Transactions The type or sector specific to a transaction will influ - ence the type of tax that will be applied in a particular transaction. In this regard, the following are some of the taxes included. Value Added Tax (VAT) This is applicable to various goods and services ren - dered to an entity or when rendering the same to another entity if the goods or services are not exempt - ed or zero-rated. As of 2026, the KRA strictly enforces eTIMS compliance; businesses can only claim input VAT if the supplier provides a valid electronic tax invoice. Additionally, the standard rate remains 16%, but the threshold for mandatory registration is KES5 million in annual turnover. Excise Duty This is commonly applicable in various transactions, such as bank transactions, gains in the gaming indus - try, and for certain products/goods per given Harmo - nised System (HS) Codes, among others. In 2026, excise duty on fees for money transfer services by banks and other financial providers is set at 15%. Furthermore, a new 10% excise duty applies to fees charged by platforms for the transfer or exchange of virtual assets, such as cryptocurrencies. For gains in the gaming industry, a 5% excise duty is applicable on the amount deposited into a customer’s betting wallet; this, however, does not apply to gains accrued from horse racing. Withholding Tax (WHT) This is applicable to various classes of transaction and an incorporated business ought to know when to apply for the same. Some instances where WHT
is applicable include consultancy fees, royalties, and gaming-related winnings, among others. For 2026, the rate for resident management and professional fees remains 5%, while the rate for non-residents is 20%. Notably, WHT on digital content monetisation (influ - encers and creators) is established at 5% for residents and 20% for non-residents. Gambling Industry-Based Tax This is applicable to all transactions within a betting or gaming wallet. Under the Finance Act 2025, the previous system of taxing “winnings” and “gross gam - ing revenue” was replaced by a wallet-based model. Excise duty is now set at 5% and is applied at the point of deposit – specifically when a customer trans - fers money from their mobile wallet (eg, M-Pesa) to the betting company’s wallet. Furthermore, withhold - ing tax (WHT) is also set at 5% and applies to the total value of all withdrawals made from the betting wallet, regardless of whether the funds represent profit or the return of the original stake. These taxes are collected in real time and remitted to the KRA. Minimum Top-Up Tax This is applicable to a resident entity or an entity with a permanent establishment in Kenya that is a part of a multinational group with a consolidated annual turnover of EUR750 million (approximately KES104 billion) or more. Effective from January 2025, this tax ensures an effective tax rate (ETR) of 15% in Kenya. If the entity’s ETR falls below 15% due to local tax incentives, the MTT requires the entity to pay a “top- up” amount to reach the 15% minimum threshold. Stamp Duty In 2026, stamp duty remains a critical requirement for the legal enforceability of documents in Kenya, as an unstamped instrument is generally inadmissible as evidence in court. The prevailing rates for prop - erty transfers are categorised by location: a 4% duty applies to land and buildings within gazetted cities and municipalities, while a lower rate of 2% is charged for transfers in rural areas. For corporate and com - mercial transactions, the transfer of unlisted shares attracts a 1% duty on the transfer value, while com - mercial leases are taxed at 1% of the annual rent for terms up to three years, increasing to 2% for longer durations.
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