Just before President Uhuru Kenyatta left for the Africa-USA Summit in Washington DC,he made a crucial announcement that Kenya will impose capital-gains and windfall taxes on oil, gas and mining companies.
This he said will be done within months to ensure the Kenya maximises benefits from its mineral resources.”We want to ensure that we as a country also are able to benefit from both the windfall and capital-gains tax.” said the president.
This comes as a blow to oil explorers, Tullow Oil and partner Africa Oil, who have found oil reserves in northern Kenya. BG Group is also exploring for gas and Randgold Resources is studying the nation’s potential for gold production.
This is in a move to avoid a situation like the one in Uganda vs Tullow Oil. Tullow Oil is contesting in court the state revenue authority’s demand that it pays capital-gains tax of about $473m following its sale of assets in Uganda. The explorer has paid 30pc of the amount.
Kenya’s Energy Bill is yet to be passed but plans are underway to have it passed soonest possible.
What is Capital Gains tax?
Capital gains tax is tax on gains. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.