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Real Estate Blog

Stamp duty: An quick guide on the charges

stamp duty

Stamp duty explained

Stamp duty is the tax levied on various transactions such as transfer of land, shares, and stocks. It is collected by the Ministry of Lands, which has outsourced the mandates to Kenya Revenue Authority (KRA). KRA, in turn, contracts commercial banks to collect the money at a commission.

Stamp duty is a key revenue earner for the Government. Of all transactions that attract this charge, transfer of land contributes the biggest proportion. About Sh7.9 billion is collected by the Ministry of Lands, which also includes land rents and other related land fees. This tax made the ministry one of the top revenue earners. In essence, it explains the importance of land to the country’s socio-cultural, political and economic development.

Application of stamp duty

Stamp duty on land apart from land transactions involving Government ministries, parastatals, succession and transfer of property where the consideration is natural to love and affection, all other land transactions involving the change of ownership either through valuable consideration, gifts or partition of land attract stamp duty. Stamp duty assessment is at two per cent of the value of the property for rural areas and four per cent for municipalities.

For partitioned property, one of the resultant portions is exempt from this charge. Once the requirements like preparing the sale agreement, obtaining appropriate land board consent and clearance of land rates and rent where applicable is paid, the next step is to prepare transfer forms — legal instruments to effect the change of ownership. Passport-size photographs of the concerned parties are affixed on the transfer forms. Also attach copies of the National Identity Card/passports or certificates of incorporation and personal identification number (PIN), which must all be witnessed and certified by a judicial officer or any other person permitted by law.

The documents are presented to the respective land registry for valuation and assessment of stamp duty and other statutory fees. After that, the KRA forms are filled and payments of other fees done in the local government treasuries while stamp duty is paid in any of the authorized commercial banks. Upon receipt of payment, the documents are lodged to enable issuance of new title deeds, lease or completing any other transaction as the case may be.