Capital Gains Tax Implications
Consequently, REAT, having taken the advice of both its Legal Adviser and Sponsoring Broker, has taken the view that if at the time payment for the RVP shares are to be made to the RVP shareholders who have accepted the Offer, the appeal by KASIB (Petition No 22 of 2015 KASIB v KRA & another ) has not been heard and determined in substance by the Court of Appeal, or if no appeal is lodged by KASIB, or if the current laws governing CGT have not been amended, then REAT shall, in accordance with the law as it currently stands:
a) Pay individual RVP shareholders net of CGT as provided for in the Income Tax Act. The CGT due on account of these shares shall be calculated in accordance with the mechanism for determining the base cost set out in the Guidelines issued by the KRA in January 2015.
b) Pay corporate RVP shareholders gross of CGT, leaving them to account for CGT themselves, in accordance Income Tax Act.
Should the law change in the intervening period, that is, prior to the payment date for the Offer, scheduled for 17thJune 2015, all Agents shall be updated by the Sponsoring Stockbroker regarding any consequent change to the CGT treatment on the share transfers for the RVP shares.