KENYA Law and Practice Contributed by: Anne Kinyanjui and Loice Erambo, DLA Piper Africa, Kenya (IKM)
agency. The land registrar also makes an entry in the register of the intended acquisi - tion. The inquiry stage • At least 30 days after publishing the above notice, the NLC publishes another notice in the Kenya Gazette announcing the date of an inquiry to be conducted by the NLC. • Before the date of the inquiry, the interested persons submit their written claims for com - pensation to the NLC. • On the hearing date, the NLC examines the interested persons to confirm their proprietary interests in the land and hears claims for compensation. The post-inquiry stage • After the inquiry, the NLC prepares a written award in favour of the interested persons and serves a notice of the award on each inter - ested person. • Upon acceptance of the award, the NLC promptly pays compensation to the entitled persons within one year of taking possession of the land. Compensation may be monetary or otherwise, including land swaps. Possession and vesting • After an award has been made, the NLC may take possession of the land by serving a notice to each interested person and the land registrar, specifying the day of possession. The title then vests in the national or county government (as the case may be). • Upon taking possession and payment of just compensation in full, the land vests in the national or county governments, free from encumbrances. • The landowner is required to deliver the title documents to the land registrar for cancella - tion if the whole land has been acquired, or
for registration of the resultant parcels and issue of their titles if only a portion of the land is acquired. 2.10 Taxes Applicable to a Transaction Taxes in Direct Sale of Real Estate Capital Gains Tax (CGT) and stamp duty are applicable in real estate transactions. CGT is paid by the seller at the rate of 15% of the net gains received upon sale of the immovable prop - erty. The seller will also pay CGT at the rate of 15% on the transfer of shares where the shares or comparable interest derive more than 20% of their value directly or indirectly from immovable property in Kenya. Stamp duty is paid by the purchaser at the rate of 2% of the value of the property if located in a rural area, or 4% of the value of the property if located in an urban area. The Income Tax Act prescribes transfers exempt - ed from CGT, including the transfer of property to a registered family trust. Similarly, the Stamp Duty Act prescribes transfers that are exempt from stamp duty, including transfers to first-time homeowners under the AHS. Taxes in Sale of Real Estate by Way of Shares Where real estate is purchased by way of the acquisition of shares in a land holding company, stamp duty will be paid by the purchaser at the rate of 1% of the value of the acquired shares. This also applies in the event of the subsequent acquisition of the shares of the company. Fur - thermore, CGT will be charged at the rate of 15% of the net gain on the sale of the shares by the seller.
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