The 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 towards taxing cryptocurrencies. The country’s lawmakers are looking to pass The Capital Markets (Amendment) Bill, which would impose a crypto tax on transactions. The charges will be similar to excise duty on bank transactions.
crypto tax is coming
Currently, banks in Kenya charge a 20% excise tax on all commissions and fees on bank transactions. If the bill is passed, Kenyans would effectively pay capital gains tax on cryptocurrencies if their prices rise. Those who make profits on their crypto trades may be required to pay taxes 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 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 the authorities with the necessary information to process the crypto tax. It includes the income received from the transaction, the related cost and the gain or loss arising therefrom.
Kenya leads the race for crypto ownership
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 this and recommended taxation.
Only four countries have a higher proportion of crypto-owning citizens than Africa: Ukraine, Russia, Venezuela and Singapore. UNCTAD also recommended mandatory registration of crypto exchanges and digital wallets.
The sector has improved significantly on several fronts related to the crypto market. This explains why the authorities want to take control quickly.
Crypto and blockchain adoption is growing rapidly in Africa
Crypto adoption is also on the rise in the Middle East and North Africa. The region was set to grow the fastest in 2022 as compared to the rest of the world.
Sub-Saharan Africa is also doing well in terms of adoption, with many using the asset class for payments of less than $1000. Africa is also seeing huge growth in terms of entrepreneurship, with several blockchain startups launching in the region.
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