Whether you’re buying a home, leasing commercial property, transferring shares, or registering a legal document, you’ll likely encounter Stamp Duty—a tax imposed on specified transactions and documents in Kenya.
Stamp duty is an important consideration whenever it is required to be paid. Failure to pay it affects the legality and enforceability of your transactions and ultimately the cost of the transaction, if penalties and interest are applied. This article breaks down what stamp duty is, how it works in Kenya, how to ensure you comply and how to check if your transaction or document is exempt.
Table of Contents
- What Is Stamp Duty?
- When Is Stamp Duty Payable?
- How Much Is Stamp Duty in Kenya?
- How Is Stamp Duty Assessed?
- Common Transactions Subject to Stamp Duty
- Who Pays Stamp Duty in Kenya?
- Exemptions from Stamp Duty
- How to Pay Stamp Duty in Kenya
- Consequences of Not Paying Stamp Duty
- FAQs about Stamp Duty in Kenya
What Is Stamp Duty?
Stamp duty is a form of tax levied on legal instruments and transactions as evidence of a transfer of an interest or right in a property or other type of asset. It is administered under the Stamp Duty Act.
A document that must be stamped must be presented to the Kenya Revenue Authority (KRA) for stamping. Stamping is the marking of documents with a red stamp called a franking machine to indicate that the duty has been paid. An unstamped document that requires duty is inadmissible in court and unenforceable in law.
When Is Stamp Duty Payable?
Stamp duty becomes payable upon the execution of a chargeable instrument. Common triggers include:
- Signing of a sale agreement or transfer deed
- Registration of a lease or tenancy
- Allotment or transfer of company shares
- Issuance of mortgages or charges
Stamp duty must be paid within 30 days of the execution of the instrument. Payment delays attract penalties and interest.
How Much Is Stamp Duty in Kenya?
1. Property Transfers
| Property Location | Stamp Duty Rate |
|---|---|
| Urban areas | 4% |
| Rural areas | 2% |
2. Leases
- Lease for < 1 year: Exempt
- 1 to 5 years: 1% of annual rent
- Over 5 years: 2% of annual rent
3. Share Transfers
- 1% of the value of the shares subject to the transfer.
4. Mortgages and Charges
- 0.1% of the loan amount
Note: Where the value is unclear, the duty is assessed on the market value or the price it is sold at, whichever is higher.
How Is Stamp Duty Assessed?
The valuation process is handled by the Chief Government Valuer for property and land-related transactions. You must submit:
- The signed instrument (e.g., Transfer)
- Supporting documents (e.g., Sale Agreement, Title)
- Duly filled Valuation for Stamp Duty (Form RL 19)
The valuer determines the dutiable amount. Once the assessment is done, KRA issues a payment slip via the iTax platform.
Common Transactions Subject to Stamp Duty
You will likely incur stamp duty in these transactions:
- Land and property sales
- Transfers of leasehold or freehold interest
- Transfers of company shares
- Leases or subleases
- Trust deeds and settlements
- Mortgages and debentures
- Incorporation documents for foreign companies
Why Do Share Transfers and Property Transfers Incur Stamp Duty?
Stamp duty is not just a tax—it’s proof of legal recognition and enforceability of your transaction. In Kenya:
- For property, stamp duty is part of registration at the Lands Registry.
- For shares, it validates the transfer of beneficial ownership and is required for updating the company’s share register.
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Who Pays Stamp Duty in Kenya?
Unless parties agree otherwise, the transferee or buyer typically pays the stamp duty. For leases, the tenant is usually responsible.
However, in company share transfers, it may be paid by the transferee, transferor, or company, depending on internal agreements.
Exemptions from Stamp Duty
Some transactions qualify for full or partial exemption. These include:
- Transfers between spouses (including during divorce)
- Transfers to registered family trusts
- Transfers from a holding company to a 100%-owned subsidiary
- Instruments executed by the Government
- Company restructuring under the Capital Markets Act
To qualify, you must apply to the Cabinet Secretary for National Treasury, usually via the KRA Commissioner, with:
- A formal application letter
- Supporting documentation
- The original instrument
If an exemption is granted, KRA will issue an exemption letter and mark/stamp the document “Exempt.”
How to Pay Stamp Duty in Kenya
Stamp duty is paid electronically through iTax. Here is a simplified process:
- Log in to iTax: Go to https://itax.kra.go.ke
- Generate a Payment Slip: Under “Payments”, select “Stamp Duty”
- Submit Documents: Provide copies to the relevant Registry (e.g., Land or Companies Registry)
- Make Payment: Pay at a KRA-approved bank or via mobile money
- Get Stamped Document: After payment is confirmed, KRA will digitally stamp and return the document.
Tip: Always retain proof of payment for future disputes or audits.
Consequences of Not Paying Stamp Duty
Failure to pay stamp duty can result in:
- Penalties and interest (up to 5% monthly)
- Document being inadmissible in court
- Delay in registration of land, leases, shares, etc.
- Legal non-recognition of the transaction
If found to be deliberately under-declared, KRA may impose tax evasion fines.
FAQs About Stamp Duty in Kenya
Can stamp duty be waived?
Yes, but only through a formal exemption approved by the Cabinet Secretary on recommendation by KRA.
What if the property is a gift?
Stamp duty still applies based on the market value of the property, unless it is exempted under a different provision (e.g., transfer to a spouse or a family trust).
Do off-plan property buyers pay stamp duty?
Yes—stamp duty becomes payable when the transfer of title is executed, instead of at the initial sale.
Is stamp duty refundable?
Stamp duty is refundable in limited cases, for example, if it is overpaid or the transaction is voided before registration, KRA may process refunds. You must apply for a refund formally.
Need Help With Stamp Duty?
Stamp duty can become a legal hurdle if not handled correctly, especially in land transfers, leases, or share transactions. At Wacu Mureithi & Co. Advocates, we help clients:
- Accurately assess and compute duty
- Apply for exemptions
- Comply with timelines and procedures
- Handle disputes or delays at registries
Contact us today to protect your interests and avoid costly mistakes.