The Finance Act of 2023 introduced changes to various tax laws in Kenya, some of which relate to the capital gains tax (CGT) regime. These changes will likely have a far-reaching effect on private equity funds investing in Kenya through offshore vehicles.
The changes are far from straightforward, and the Kenya Revenue Authority (KRA) has become increasingly aggressive in its pursuit of revenue, concentrating on increased audits and assessments, particularly with respect to revenue and gains accrued abroad and offshore disposals by private equity funds. With the introduction of the new CGT provisions, the KRA is already scrutinising offshore corporate structures with underlying investments in Kenya much more keenly. The Tax Appeals Tribunal has also recently issued several decisions that significantly impact private equity investments in Kenya.
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