Kenya plans to impose a 15% capital gains tax (CGT) on offshore sales of local companies, targeting a structure through which foreign venture capital and private equity investors have exited Kenyan businesses without paying local taxes.
The proposal in the Finance Bill 2026 tabled before parliament would allow the Kenya Revenue Authority (KRA) to tax gains made by non-resident investors selling shares abroad if those shares derive their value from Kenyan assets or operations.
Under the proposed amendment to the Income Tax Act, gains arising from “the alienation of shares by a non-resident person where the shares derive their value from Kenya” would become taxable in Kenya, even if the underlying transaction occurs outside the country.
The amendment could be Kenya’s latest attempt to earn revenues from foreign investor exits, particularly in sectors such as technology, energy, and infrastructure, where ownership structures are routed through offshore holding companies in jurisdictions such as London, Mauritius, Delaware, and the Cayman Islands.
The Treasury is also seeking powers to tax transactions that result in “a change of the group membership of a company resident in Kenya” or changes in ownership of Kenyan property. The proposed changes appear designed to close gaps that have made it difficult for the taxman to enforce capital gains tax on offshore transactions involving Kenyan assets.
