KASIB to suspend trading at Nairobi Securities Exchange

by Elayne Wangalwa 0

The association said that they are not willing to speak to the media currently, however, they have promised to issue a comprehensive statement on the matter on 20 February 2015.

This directive will be effective beginning tomorrow for the next 19 trading days pending a ruling from Kenya’s High Court.

KASIB says this suspension will allow for consultation over the contentious capital gains tax reintroduced by the government this year.

“This shall ensure that members uphold the rule of law and that they do not disobey the law. It also allows for the creation of an avenue for consultations with the relevant authorities to find a way of complying with the law in its entirety,” KASIB said in a statement.

Recently, KASIB filed a petition against Kenya’s Attorney General and the Kenya Revenue Authority (KRA) challenging KRA’s implementation of the capital gain tax.

“We find ourselves in a difficult position because if we deduct the tax the investors are on our case, if we do not the government is on our case, so what we intend to do is keep off the market until we get clarity on this matter from the court,” a source within KASIB told CNBC Africa.

Since its introduction, the capital gains tax has stirred an uproar in the Kenyan market this is after nearly three decades of being shelved away. The tax is currently in motion at a relatively benign rate of 5 per cent as the tax gain made on transfer of property which includes land, buildings and marketable securities.

However, the re-introduction of the tax to raise revenues to meet Kenya’s ballooning recurrent and development expenditure, has caused a slowdown in the stock market.

In January, the country’s Cabinet Secretary for National Treasury, Henry Rotich said that the new tax – which should be paid upon transfer of property and not after the 20th day of the following month in which the transfer was made – will not be suspended.

Nonetheless, the rate of the 5 per cent capital gain tax is much lower and favourable compared to Kenya’s neighbouring countries. In Uganda, the government charges a capital gains tax of 30 per cent on property while Tanzania’s charges 20 per cent on foreigners and 10 per cent on locals.

The KASIB, which was initially founded as the Association of Kenya Stockbrokers (AKS), represents the interests of Kenyan stockbrokerage and investment banking companies.