The REITs Association of Kenya (RAK) successfully lobbied for the re-instatement of exemption of Value Added Tax (VAT) on transfer of Assets into REITs, as noted during the 2021/22 Budget statement reading. The Cabinet Secretary, National Treasury noted that REITs can be used as a financing alternative for affordable housing, including specialized facilities like student hostels. The CS proposed to exempt from VAT asset transfer into the Real Estate Investment Trusts (REITs) and Asset Backed Securities (ABS). He noted that this will deepen our Capital Markets by encouraging investors to participate in REITs.
This re-instatement comes after the deletion of this tax benefit in March of 2020 when the Government of Kenya put in place measures to cushion the country’s economy from the effects of the pandemic.
This is a great milestone and move in the right direction for REITs sector. REIT issuers will now be able to enjoy VAT free transactions when moving properties into REITs. Following publication of the Finance Act 2021, we anticipate continued growth and sparked interest within the REITs sector.
Many thanks to RAK Main Committee and Tax Working Group, Nairobi Securities Exchange (NSE), Capital Markets Authority (CMA), Kenya Property Developers Authority (KPDA) and Kenya Private Sector Alliance (KEPSA) for combined and consistent efforts towards pushing for achievement of this milestone.