Selling your business is likely the largest financial transaction of your life. Yet few Kenyan sellers plan for the tax implications until after the deal is signed — and by then, options are limited. Early tax planning can legally save millions of shillings.
Capital Gains Tax (CGT)
CGT in Kenya is levied at 15% on the gain (selling price minus acquisition cost and allowable expenses) on the transfer of property — including business assets, shares, and land. Shares in a private company transferred at a gain are subject to CGT. The transaction must be reported to KRA within 30 days.
Goodwill and Its Tax Treatment
When you sell a business as a going concern above its net asset value, the premium is goodwill. Goodwill is not a depreciable asset for tax purposes — gains on disposal are subject to CGT. However, disaggregating goodwill into specific items (customer lists, brands) may change the treatment.
Stamp Duty
Transfer of land and buildings attracts stamp duty (typically 4% in urban areas, 2% outside municipalities). Share transfers attract 1% stamp duty on consideration. These are over-and-above CGT.
Structuring for Tax Efficiency
- Share sale vs. asset sale: different tax outcomes for buyer and seller
- Earn-out arrangements: tax recognition timing differs from lump-sum
- Holdover relief: available on gifted shares in qualifying situations
Before signing any sale agreement, engage Avatechtax for a transaction tax review. Our Corporate Advisory package includes tax planning for business disposals. Contact us.
