• The recent notice from the central bank of Kenya about taxation in cryptocurrency disturbed the smooth crypto flow in the country.
• The notice clearly described cryptocurrency as a mere property that is probably subjected to capital gains taxes.
Image: REUTERS
From the innovative invention of M-Pesa to the highest use of cryptocurrency, Kenya has long been known for its financial progress in recent years. Being a major part of the sub- Saharan community, Kenya holds significant value when it comes to contributing to African’s economy. It comes amongst the top 10 countries that have the highest cryptocurrency use globally.
Being a leading country in extensive crypto growth, Kenyans have shown much improvement in how they deal with this incredible digital money and make profits out of it. Despite the quantitative ease, helpful crypto exchange services, sky-rocketing crypto prices, numerous Kenyan investors feel it an extremely troubling task to deal with cryptocurrency while living in Kenya.
The recent notice from the central bank of Kenya about taxation in cryptocurrency disturbed the smooth crypto flow in the country. The notice clearly described cryptocurrency as a mere property that is probably subjected to capital gains taxes. This drastically influenced the exchange value of cryptocurrency all over Kenya.
But, one thing we can believe without saying is that cryptocurrency is not like your ordinary stocks or real estate investments that promise to give a steady profit rate. Instead, cryptocurrency is a digital currency that is known for its high volatility that doesn’t promise you a single day of earning profits.
This taxation of cryptocurrency has drawn the attention of numerous authorities that trades cryptocurrency or deals in any other activity related to cryptocurrency dealing in Kenya. Being an unregulated digital currency, the government and central bank of Kenya doesn’t take responsibility for any mishap caused before, during, and after the cryptocurrency dealing.
From dealing with bitcoin -the largest cryptocurrency to mining other small-scale cryptocurrencies, Kenyans have a strong crypto portfolio of trading with Bitpal. But this taxation law by the government was a major threat to Kenyans investors who were enormously progressing with their cryptocurrency.
To decide the accurate taxes on each cryptocurrency, the government handed over the responsibility to Kenya Revenue Authority (KRA). Some of the statements dictated are as follows.
Since cryptocurrency is a well-known digital currency and performs digital transactions only, therefore the taxes applied are also expected to be paid digitally.
The new taxation policy on Kenya with a 15% grass transaction value was decided to be implied by Jan 2021.
All the data regarding the taxes will be carefully tracked and secured in records using a special software of data-driven detection.
The recent tweet by KRA clears that investors are payable to cryptocurrencies only if they are regularly involved with the crypto exchanges based in Kenya.
From the regulation of cryptocurrency to collecting taxes, the government of Kenya is now strictly examining every crypto use in the country.
Earlier the crypto use in the country had never been given much consideration but this taxation policy will be of immense help in regulating crypto use in Kenya. Plus, it will bring the spotlight to all the legal and illegal activities carried out by the country in the name of crypto use.
Any activity that involves the use of cryptocurrency makes you subject to paying a 15% tax value to the government of Kenya.
Overall, crypto taxation will possess a major effect on the popular crypto exchanges that work in Kenya. On paying a major portion of the profits to the government in the form of taxes, there’re very minimal chances of these crypto exchanges to make anything out of their services.
With all this going in the country, the Kenyan government is progressively finding ways to do modifications to this taxation policy and improve it for better results. However, they have already increased the tax revenues on cryptocurrency than the tax values they started from.
Conclusion:
While on the one hand cryptocurrency taxation has been a nightmare for Kenyan investors. While on the other hand, it has successfully halted all the prohibited use of digital currency in the country due to which the government of Kenya imposed a 15% risk on any crypto use.