Stamp Duty in Kenya Law

 

What is Stamp Duty?

Introduction

In Kenya, stamp duty is a tax levied on various legal documents. This is Revenue raised by the Government by requiring stamps sold by the government to be affixed to designated documents. Stamps are affixed or embossed or impressed by means of a red dye or franking or adhesive revenue stamps.

-Stamp Duty Act designated various conveyancing instruments to be stamped. The Schedule to the Act specifies that Stamp Duty must be paid within 30 days of execution of the document if prepared in Kenya and if outside Kenya it must be paid within receipt of that document.

**Who is responsible for paying stamp duty?**

* **Land transactions:** Generally, the buyer is responsible for paying stamp duty.
* **Other instruments:** Responsibility varies depending on the specific document.

Failure to pay Stamp Duty

Failure to pay is equivalent to evasion of tax and is a criminal offence under S113 of the Act the penalty of which is imprisonment for a term not exceeding one year or to a fine to exceeding not 100,000, or to both such imprisonment and such fine.

· S111 RLA supplements the SDA as it provides that no document is acceptable for registration if stamp duty has not been duly paid and documents properly stamped.

Stamp Duty Rates

Duty on conveyancing instruments is paid on the ad valorem values at the following statutory rates:

· Transfers:

* 4% for properties situate within cities and municipalities; and

* 2% of the value of properties outside municipalities and cities.

 **Land transactions:**
    * **Urban areas (municipalities):** 4% of the valuation amount
    * **Rural areas (freeholds):** 2% of the valuation amount
* **Leases:**
    * **Period of three years and under:** 1% of annual rent
    * **Period over three years:** 2% of annual rent
* **Creation or increase of share capital:** 1%
* **Transfer of unquoted shares or marketable securities:** 1%
* **Transfer of quoted shares of marketable securities:** Exempt

Note: Long-term leases or subleases are deemed to be transferred and fetch duty as if they were transfers

· Charges and mortgages- 0.2% of the amount secured

· Discharges/re-conveyances- 0.05% of the amount secured

· Leases:

-1% of the annual rent for a lease of less than 3 years; and

-2% of the averaged rent for a lease of 3 years or more.

 

 **Disclaimer:** This information is for general guidance only