Capital Gains Tax in Kenya 2025 – KSh 417 Million High Court Win for Investors

Q: What is the Capital Gains Tax rate in Kenya for 2025?

The Capital Gains Tax (CGT) rate in Kenya for 2025 is 15% on gains from qualifying asset sales.

Q: Does CGT apply on registration or sale completion date?

The sale completion date is the correct tax point for CGT, as confirmed by the 2025 High Court ruling.

Q: Can I challenge KRA’s CGT assessment?

Yes. You can appeal a CGT assessment to the Tax Appeals Tribunal and, if needed, escalate the case to the High Court.

Q: How do I ensure I pay the correct CGT rate?

To ensure you pay the correct CGT rate, keep clear records of the sale completion date, proof of payment, and seek professional tax advice.

Q: Are there any CGT exemptions in Kenya for 2025?

Yes. Common exemptions include: transfers between spouses, transfers due to inheritance or gifts to family members, disposal of shares listed on the Nairobi Securities Exchange (NSE), and property disposals where the gain is less than KSh 3 million (for land and buildings). To benefit, you must declare the exemption and provide proof to KRA via iTax before the transfer is completed.

Capital Gains Tax in Kenya 2025 – KSh 417 Million Tax Dispute Win

August 13, 2025

Table of Contents:

Introduction
Background – The Share Sale at the Centre of the Dispute
The Dispute with KRA
The High Court’s Landmark Ruling
Comparison Table – KRA’s Position vs. High Court’s Decision
Wider Impact – Hope for Other Taxpayers
Capital Gains Tax in Kenya 2025 – Quick Facts
FAQs on Capital Gains Tax in Kenya 2025
Conclusion
Disclaimer
Next Step

Introduction

Capital Gains Tax in Kenya in 2025 is charged at 15% on gains from the sale of qualifying assets such as property or shares.

However, a landmark High Court ruling in 2025 clarified that the applicable rate depends on the sale completion date, not administrative processes like registration of the asset sale.

In one of the most notable tax decisions in recent years, a prominent businessman in Kenya won a KSh 417 million Capital Gains Tax (CGT) dispute against the Kenya Revenue Authority (KRA).

The case – centred on the sale of millions of shares – proved that well-timed, well-documented transactions can protect taxpayers from unexpected, backdated tax increases.

This precedent sends a strong signal to investors, entrepreneurs, and property owners about the importance of understanding CGT trigger dates in Kenya.

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Background – The Share Sale at the Centre of the Dispute

In December 2022, the businessman sold 5,910,000 shares in Harleys Limited to Westland Heights Limited.

Case Details	Particulars
Date of Sale	December 2022
Shares Sold	5,910,000 in Harleys Limited to Westland Heights Limited
CGT rate at the time	5%
Tax Paid	KSh 260.2 million

Shortly after, the Finance Act 2022 increased the CGT rate from 5% to 15%, effective 1 January 2023. The businessman maintained that his sale occurred before the new rate applied.

The Dispute with KRA

KRA claimed the CGT should be calculated based on the date of registration and stamping at the Lands Registry – in this case, 4 January 2023, after the higher rate (15%) took effect.

The Tax Appeals Tribunal (TAT) agreed with KRA, but the businessman appealed to the High Court.

The High Court’s Landmark Ruling

The High Court overturned the TAT decision, ruling:

The CGT trigger date is when the sale is legally and financially completed – in this case, December 2022.
Administrative steps like registry stamping do not change the tax date.
This ruling saved the businessman KSh 417 million in extra tax liability.

Comparison Table – KRA’s Position vs. High Court’s Decision

Issue	KRA's Position	High Court's Decision
When CGT is triggered	On date of registration & stamping at the Lands Registry	On date of legal & financial completion of sale
Applicable CGT rate	15% (post-Jan 2023 rate)	5% (rate in effect at time of sale completion)
Reasoning	Registration formalises transfer and should determine tax point	Ownership & payment transfer determine tax point; registry date is administrative
Impact on Taxpayer	Higher liability of KSh 417M	No additional liability; taxpayer saved KSh 417M

Wider Impact – Hope for Other Taxpayers

This decision has been welcomed by business leaders and investors across Kenya, including the Nice & Lovely founder, who had faced similar disputes.

It reinforces that Capital Gains Tax in Kenya depends on when a transaction is truly completed, protecting taxpayers from backdated tax increases.

Why This Matters

This decision helps other investors and entrepreneurs in Kenya:

The tax rate depends on when the sale is completed, not when paperwork is done.
Taxpayers now have a stronger case against retrospective CGT increases.

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Capital Gains Tax in Kenya 2025 - Quick Facts

Aspect	Details
What it is	Tax on profit from selling assets (e.g., property, shares)
Current rate	15% (effective 1 Jan 2023)
Old rate	5% (before Jan 2023)
Tax Trigger	Sale completion date (ownership + payment finalised)
Exemptions	Certain gifts & inheritances (with conditions)

FAQs on Capital Gains Tax in Kenya 2025

1. What is the Capital Gains Tax rate in Kenya for 2025?

It’s 15% on gains from qualifying asset sales.

2. Does CGT apply on registration or sale completion date?

The sale completion date is the correct tax point, as confirmed by the 2025 High Court ruling.

3. Can I challenge KRA’s CGT assessment?

Yes, you can appeal to the Tax Appeals Tribunal and, if needed, the High Court.

4. How do I ensure I pay the correct CGT rate?

Keep clear records of the sale completion date, proof of payment, and get professional tax advice.

5. Are there any CGT exemptions in Kenya for 2025?

Yes. Common exemptions include:

Transfers between spouses
Transfers due to inheritance or gifts to family members
Disposal of shares listed on the Nairobi Securities Exchange (NSE)
Property disposals where the gain is less than KSh 3 million (for land and buildings).

To benefit, you must declare the exemption and provide proof to KRA via iTax before the transfer is completed.

Conclusion

The KSh 417 million CGT win is a milestone in Kenya’s tax law. It shows that timely, well-documented sales are key to avoiding unexpected tax increases.

For business owners, investors, and property sellers, this ruling means greater clarity and protection when paying Capital Gains Tax in Kenya 2025.

Additionally, it’s a reminder that understanding the legal definition of a tax trigger date can save millions.