Kenya Plans To Charge Tax On Cryptocurrency Transactions

Kenya Revenue Authority (KRA) plans to regulate the cryptocurrency sector and intends to charge tax on digital currency transactions. The Crypto market is overgrowing in Kenya, and currently, four million users are trading in digital assets. 

According to Business Daily, The Capital Market (Amendment) Bill 2022 aims to levy tax on crypto exchanges, wallets, and transactions. The process of charging tax is quite the same as excise duty applies on bank transactions, and banks usually apply 20% excise duty on all fees and commissions charged on transactions.

However, after approval of the recommended bill, the traders will pay tax on digital transactions, gains on digital assets. This is due to increased market value and profits gained from cryptocurrency trading.  

Mosop MP Abraham Kirwa, the bill sponsor, said.

Where the digital currency is held for a period not exceeding twelve months, the laws relating to income tax shall apply, or for a period exceeding twelve months, the laws relating to capital gains tax shall apply

Furthermore, the crypto industry needs to be regulated correctly in Kenya and throughout the world, and it is the first time in Kenya to initiate regulation in the crypto assets market. It would bring cryptocurrency mainstream.  

The Investors Are Bound To Disclose The Digital Assets:

It is tough to assess the value of digital assets held by Kenyan citizens, but the amount can be in billions of shillings. The proposed bill will require every crypto holder to show all the information to the Capital Market Authority (CMA) for taxation purposes. 

 The holders would show off the amount of digital currency in Kenyan shillings. They will be bound to disclose the date of purchase, sales, and also the type of digital currency. The law will apply to those who held the digital currency for a period exceeding twelve months. 

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Additionally, the law got attention six months after the UN highlighted that 8.5% of Kenya’s population, or 4.25 million citizens hold digital currency. The data shows Kenya is at the forefront of developed countries like America, whose 8.3% own digital currency. 

The Major Usage Of Cryptocurrency In Kenya

Chainalysis reports that Kenyan investors use cryptocurrencies to secure their funds and conduct international transactions for personal remittances for people living in places. Like Europe and North America or for business use, such as buying things to import and sell.

Moreover, the primary purpose is to protect Kenyans from threats linked with unregulated cryptocurrency trades. The Capital Market Act (CMA) will issue licenses to individuals involved in crypto trading. 

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