KENYA Law and Practice Contributed by: Anne Kinyanjui and Loice Erambo, DLA Piper Africa, Kenya (IKM)
WHT is deducted by the payer at source and remitted to KRA. Interest earned from loans obtained from foreign sources for purposes of investing in the energy or water sectors, or in roads, ports, railways or aerodromes is exempt from WHT pursuant to Legal Notice No. 91 of 2015. CGT Gains from the disposal of real estate are subject to CGT; see 2.10 Taxes Applicable to a Trans- action . Rental Income Tax Rental income tax is paid by residents earning annual rental income of between KES288,000 and KES15 million. The tax is charged monthly at the rate of 7.5% of gross rent received per month. No expenses or capital deductions are allowed to be deducted while computing the tax. This tax is not applicable to non-residents. Rent - al income earned by a non-resident is subject to WHT at the rate of 30% of the gross rental
• capital expenditure incurred on legal costs and stamp duty in connection with the acqui - sition of a lease for a period not exceeding 99 years of premises to be used for business purposes; • capital expenditure by the owner or occupier of farmland for the prevention of soil erosion; • sums expended during a year of income for structural alterations to the premises where the expenditure is necessary to maintain the existing rent (this does not include the exten - sion or replacement of the premises) and • capital expenditure incurred by the owner or tenant of agricultural land in clearing that land or in planting permanent or semi-permanent crops thereon. REITs also enjoy the following tax exemptions: • REITs and its investee companies which have been registered by the Commissioner of Domestic Taxes are exempted from income tax, pursuant to Section 20 (1) (c) and (d) of the Income Tax Act. This exemption does not extend to the unit holders and shareholders of REITs and investee companies; and • the transfer of assets into REITs and related transactions are exempted from VAT, pursu - ant to paragraph 33 of Part II of the First Schedule to the VAT Act.
income received. 8.5 Tax Benefits
There are no specific tax benefits from owning land. However, the following expenditures are allowable deductions when determining a per - son’s taxable income:
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