New Kenyan law seeks to introduce income tax for cryptocurrency traders, says Kenya Revenue Authority (KRA).
KRA proposes laws for crypto regulations
The Kenyan National Assembly has received a bill calling for regulating and taxing cryptocurrency trading in Kenya today, 21 November 2022. According to a report on Business Daily Africa, the bill, if approved, will enable the Kenya Revenue Authority (KRA), the Kenyan government agency for revenue collection, to receive tax from over 4 million Kenyan crypto traders.
The new bill, called The Capital Markets (Amendment) Bill, 2022, seeks to introduce taxation of the crypto exchanges and digital wallets and impose taxes akin to excise duty charged on bank transactions. With this bill, the Kenya Revenue Authority (KRA) will go after the more than four million Kenyans who own cryptocurrencies if Members of Parliament approve changes to the law aimed at regulating and taxing the fast-growing digital currency trade.
Kenyan banks to deduct 20% percent excise duty on crypto transactions
With the Capital Markets Amendment bill, Kenyan Banks will now charge a 20 percent fee on all commissions and fees charged on crypto transactions. Also, Kenyans will now pay the KRA capital gains for the increased market value of cryptocurrencies when they sell or use the digital currencies in a transaction if the Bill is approved. Furthermore, Kenyans who have made cryptocurrency trading a business will likely be liable for income tax on their earnings.
Speaking on the new bill, Member of Parliament Abraham Kirwa stated, “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.”
Kenya set to launch first crypto regulations
As reported by Business Daily, the new bill would mark the first time Kenya will bring cryptocurrencies mainstream and extend regulation to the dealings in digital currencies. With the Bill, crypto dealers will be required to provide the Capital Markets Authority (CMA) with specific information for tax purposes. They will also be required to inform the CMA of the type of virtual currency transacted, the date on which the virtual currency was acquired, and the date on which the virtual currency was sold.
The bill reads, “A person who possesses or deals in digital currency shall provide the Authority with the following information for tax purposes—the amount of proceeds from the transaction, any costs related to the transaction and the amount of any gain or loss on the transaction.”