IP Assignment Tax: Stamp Duty, Capital Gains and Withholding on Transfers of Intellectual Property

IP assignment tax in Kenya raises three separate questions when a trademark, patent or copyright is sold: stamp duty on the assignment, capital gains tax on the seller’s gain, and, where the seller is not resident in Kenya, withholding tax on the price. Recording the assignment at KIPI does not answer any of them. This article on IP assignment tax sets out what the Stamp Duty Act and the Income Tax Act say, as consolidated on Kenya Law at 1 July 2026, and marks the points that the text leaves open. Confirm the position against the current Finance Act before a deal closes.

Stamp duty on the assignment instrument

Section 5 of the Stamp Duty Act makes every instrument specified in the Schedule, wherever executed, chargeable with stamp duty if it relates to property situated, or a matter done or to be done, in Kenya. The Schedule lists “Assignment upon a sale or otherwise” and refers it to the head for conveyances. Item 11 charges a conveyance or transfer on sale of “any property”, other than stock, marketable securities and immovable property charged under item 12A, on a scale that reaches Sh. 20 for every Sh. 1,000 of consideration above Sh. 2,000, which is about two per cent. The purchaser or transferee is the person responsible for the duty. Section 6 requires the instrument to be stamped within thirty days after it is first executed, or after it is first received in Kenya if it is executed outside Kenya.

The Interpretation and General Provisions Act defines “property” to include choses in action and every description of property, whether movable or immovable, so an assignment of a trademark, patent or copyright is naturally read as a conveyance of “any property”. The open question is location. The Stamp Duty Act does not say where an intangible right is situated. A right registered at KIPI is the natural candidate for Kenyan property, and we would assume the instrument is dutiable, but we have found no authority that settles the point for a foreign owner assigning a Kenyan registration.

Capital gains tax on an IP assignment

Under section 3(2)(f) and the Eighth Schedule of the Income Tax Act, gains on the transfer of property situated in Kenya are taxable. Paragraph 14 of the Third Schedule sets the rate at fifteen per cent, as a final tax. Four features matter for IP.

• Who is caught. For a company, “property” has the meaning in the Interpretation and General Provisions Act and includes property acquired or held for investment purposes, but not a road vehicle. For an individual, the Eighth Schedule defines property as land in Kenya and marketable securities only. On that wording, the Eighth Schedule does not reach an individual’s IP gain, although other provisions may still tax it as business income.
• Situs. The Schedule says where marketable securities are situated but says nothing about where a patent or trademark is situated. Whether a foreign company’s assignment of a Kenyan registration is a transfer of “property situated in Kenya” is not answered by the text.
• What counts as a transfer. Paragraph 6(1) covers a sale, exchange, conveyance or other disposal, and also the abandonment, surrender, cancellation or forfeiture of property, or the expiration of substantially all rights to it. A surrender of a registration, or the lapse of a patent, can therefore itself be a transfer; see our articles on partial surrender at KIPI and patent annuities. Paragraph 6(2)(a) excludes a transfer made only to secure a debt or loan, and a transfer back by the creditor.
• Overlap with other charges. Paragraph 3(1) provides that income is not chargeable under section 3(2)(f) where, and to the extent that, it is chargeable under another provision of the Act. That matters for the next point.

Withholding tax when the seller is non-resident

Section 2 defines “royalty” as a payment for the use or right to use, among other things, any patent, trademark, design or model, plan, formula or process, and the definition goes on to include “any gains derived from the sale or exchange of any right or property giving rise to that royalty”. On its wording, gains from selling a patent or trademark that gives rise to royalties fall within the definition. Under section 10(1), a payment by a resident person for a royalty is deemed to be income accrued in or derived from Kenya, if it is incurred in producing Kenyan income or a Kenyan business. Under section 35(1), a person paying a royalty to a non-resident without a permanent establishment in Kenya must deduct tax, and paragraph 3(b) of the Third Schedule sets the rate at twenty per cent of the gross amount payable, or five per cent where the payer is a Special Economic Zone enterprise, developer or operator.

Read together with paragraph 3(1) of the Eighth Schedule, this suggests that for a non-resident seller the result may be withholding at twenty per cent on the gross amount rather than capital gains tax at fifteen per cent on the net gain. The person who must deduct is the buyer, so the buyer carries the compliance risk. We have not confirmed how the Kenya Revenue Authority applies the royalty limb to an outright assignment, and a double tax agreement may reduce the rate; see our article on royalty withholding tax in Kenya.

Drafting an assignment for IP assignment tax

• Record the seller’s tax residence and whether it has a permanent establishment in Kenya.
• State the purchase price and apportion it between the IP and any other assets, since duty and tax are calculated on consideration.
• Allocate the stamp duty to the purchaser, as the Schedule does, and provide for stamping within thirty days.
• Say who bears withholding tax, and whether the price is grossed up. At a twenty per cent rate, delivering a net price of 100 requires a gross payment of 125.
• Keep a valuation and cost record, since a gain depends on transfer value and adjusted cost under paragraphs 7 and 8 of the Eighth Schedule.
• Record the assignment at KIPI; see trademark change of name and address at KIPI, and our discussion of chain-of-title risk in IP due diligence for cross-border M&A.

Our guide to trademark licensing and assignment in Kenya covers the non-tax side of an assignment.