Authorities in Kenya have announced that they will tax cryptocurrencies like they tax bank transactions.
The Kenya Revenue Authority (KRA) has taken a step forward in taxing cryptocurrencies. The country’s lawmakers are looking to pass The Capital Markets (Amendment) Bill, which will impose a crypto tax on transactions. The charges will be similar to excise duty on bank transactions.
Crypto tax cometh
Currently, banks in Kenya charge a 20% excise duty on all commissions and fees on bank transactions. If the bill goes through, Kenyans will effectively be paying a capital gains tax on crypto if prices rise. Those who earn profits on their crypto trades will likely have to pay a tax on the earnings.
The Bill was sponsored by Mosop MP Abraham Kirwa, who had this to say about taxation:
“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.”
The bill also requires Kenyan crypto traders to provide authorities with the information they need to process the crypto tax. This includes proceeds from the transaction, costs related to it, and gains or losses on it.
Kenya leading the crypto ownership race
Cryptocurrencies are popular in Kenya, with the country having the highest proportion of crypto-owning citizens in Africa. Data from the United Nations Conference on Trade and Development (UNCTAD) highlighted so and recommended taxation.
Only four countries have a higher proportion of crypto-owning citizens than Africa: Ukraine, Russia, Venezuela, and Singapore. The UNCTAD also recommended the mandatory registration of crypto exchanges and digital wallets.
The region has been improving considerably on many fronts related to the crypto market. This explains why authorities want to exert control quickly.
Crypto and blockchain adoption in Africa rapid
Crypto adoption has also been increasing in the Middle East and North Africa. This region was the fastest growing compared to the rest of the world in 2022.
Sub-Saharan Africa has also been faring well in terms of adoption, with many using the asset class for payments under $1000. Africa has also been seeing a large rise in terms of entrepreneurship, with many blockchain startups launching in the region.
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