KRA Proposes Crypto Tax Collection in Kenya

Kenya's Move to Regulate Crypto Transactions

The Kenya Revenue Authority (KRA) has proposed implementing taxes on crypto transactions as part of new regulations aimed at expanding domestic tax revenues and reducing foreign borrowing. This marks the first significant move in Kenya to regulate the burgeoning digital currency trade.

Proposed Tax Regulations

The proposed regulations, outlined in the Capital Market Amendment Bill, suggest introducing a 20% excise tax on crypto exchanges and digital wallets. The aim is to bring the rapidly growing digital currency market under regulatory oversight and ensure tax compliance.

Reporting Requirements for Crypto Holders

Crypto holders will be required to report detailed information about their transactions to the Capital Markets Authority (CMA) for tax purposes. This includes transaction proceeds, associated costs, and any gains or losses incurred. These measures ensure transparency and facilitate accurate tax collection.

Taxation Based on Holding Period

The proposal also delineates tax obligations based on the duration of cryptocurrency holdings. Digital currencies held for less than twelve months will be subject to income tax, while those held for longer will incur capital gains tax. This approach aligns with existing tax regulations for other asset classes.

Comprehensive Digital Currency Framework

The amendment bill aims to establish a comprehensive framework for digital currency transactions in Kenya. It defines digital currencies, outlines their creation through crypto mining, and sets regulations for their trading. Additionally, it emphasizes the responsibilities of crypto holders, including taxation, ownership rights, and promoting innovation in the crypto space.

By implementing these regulations, Kenya seeks to harness the potential of digital currencies while securing additional revenue streams through taxation.