Stamp Duty, By George W. Onyore

STAMP DUTY
The Stamp Duty is a form of revenue for the Government.
Section 5 provides that every instrument set out in the Schedule to the Act, irrespective of where it was signed as long as it relates to property in Kenya, shall be chargeable with stamp duty specified in the said Schedule.
Under Section 6 of the Stamp Duty Act documents executed in Kenya and which require stamping must be stamped within 30 days of execution. 30 days from the date of the document.
For documents executed outside Kenya, Stamp Duty must be paid within 30 days of receipt of the documents in Kenya. This becomes a matter of fact as the date the document was received in Kenya has to be proved.
Section 20 states that failure to pay Stamp Duty constitutes an offence for which a fine is payable.
A document which requires to be stamped but which is not stamped cannot be produced in evidence in court in civil proceedings.

STAMPING OUT OF TIME
The collector has the authority to allow stamping of a document where he is satisfied that the omission or neglect to stamp did not arise from any intention to evade payment of Stamp Duty or to defraud, and the circumstances of the case justify leave being given to stamp out of time.
Where such leave is given, the instrument is stamped on payment of the unpaid stamp duty and of a penalty unless the Collector waives the penalty on being satisfied that the circumstances warrant such waiver.

REFUND OF STAMP DUTY
The Act gives the Collector power to refund Stamp Duty if he is satisfied that an instrument has been erroneously assessed with duty or penalty.

The application for a refund must be made within 1 year after the date of payment of that duty.
Under the GLA and the RLA, no document required by law to be stamped shall be accepted for registration unless duly stamped. This is under Section 117 of GLA and Section 111 of the RLA.
The instruments that are required to be stamped include:
1. lease
2. transfer
3. charge
4. mortgage
5. discharge
6. re-conveyance of mortgage
7. insurance policy
8. debenture and
9. Memorandum and Articles of Association

The amount of Stamp Duty depends on the transaction in question, that is, whether it is a transfer, lease, charge, etc.
The assessment of Stamp Duty is based on the consideration stated in the instrument.
Section 10 of the Stamp Duty Act – any factor or circumstance affecting the stamp duty must be stated in the instrument, which means that the instrument must identify itself to begin with because that affects Stamp Duty. Secondly the document must also show the consideration, it must show the value of the subject matter. In a Transfer consideration is the sale price, consideration in a Charge will be the loan, under a Lease the rent is the consideration and therefore any matter affecting the stamp duty must be stated and consideration is one of those matters.
Failure to declare the correct amount for stamp duty is an offence.

Calculating Stamp Duty:
Transfers are divided into two categories
1. Urban Land – land in the municipalities - rate of stamp duty is 4%
2. Agricultural land Outside the Municipality. – the rate of stamp duty is 2%

If for example the Purchase Price on agricultural land in the municipality is KShs. 2,000,000, the rate is 4% and therefore the amount of stamp duty payable would be KShs. 80,000/-. For a agricultural property in a rural area the purchase price is KShs. 1,000,000 at the rate of 2% the amount of Stamp duty payable on transfer will be 20,000/-. Under a Mortgage/Charge the stamp duty amount is based on the amount secured and the rate is KShs. 2/- per 1000/- or 0.2% (0.002) . for example if the Mortgage amount is KShs. 5,000,000/- at the rate of 0.002% the stamp duty chargeable will be 10,000/-. For a further Mortgage/Charge the rate is 1KShs. Per 1000 – 0.001 or 0.1% If for example there was a further mortgage of KShs. 2,000,000/- the Stamp Duty payable will be KShs. 2000. The difference between a further charge and a second charge, further charge is an additional facility provided by the same lender whereas a 2nd charge another institution is giving the loan but charges the same property.
For a second Mortgage/Charge the rate will be 0.2% because it will be like a fresh charge. The rate for an equitable mortgage or charge the rate is the same as that of a further charge which is .1%
For a Discharge of Charge or re-conveyance of mortgage it is 50cents for every 1000/- which is 0.05% or 0.0005.
The difference between a legal charge and an equitable charge lies in the way both charges are created. An equitable charge/mortgage is created by a simple deposit of the document of title without more this deposit of the document creates an equitable charge/mortgage, this kind of transaction does not require registration. A legal mortgage is created by Deed which must be registered and when it is registered it is notice to the public.