(Nairobi) – The Kenya Revenue Authority (KRA) aims to capture KSh 60 billion in tax revenue from cryptocurrency dealers in the current financial year, following a KSh 10 billion collection last year. This announcement came during the Taxpayers’ Day celebrations, where the authority outlined its strategy to revamp tax regulations on digital assets.
In its efforts, the KRA has leveraged the Finance Act 2023, which enforces a 3% tax on the transfer and exchange of digital assets like cryptocurrencies. However, despite these measures, KRA faces challenges in taxing Kenya’s vast cryptocurrency market, partly due to loopholes in regulations and restrictions from the banking sector, which complicate enforcement.
To address these challenges, KRA Chairman Anthony Mwaura revealed plans for a collaborative approach. “We have agreed with our commissioner-general, and I also spoke with the Governor and Deputy Governor of the Central Bank, to set up a joint technical committee to explore all means to reach these cryptocurrency dealers,” he said.
Under Section 3 of Kenya’s Income Tax Act, cryptocurrency assets are legally taxable, though they remain unregulated by primary financial bodies like the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). This regulatory gap poses a unique challenge as cryptocurrencies like Bitcoin gain popularity. The price of one Bitcoin currently stands at approximately KSh 9.8 million, making it an attractive investment option.
To enhance compliance, KRA plans to integrate its systems with various cryptocurrency exchanges. This integration aims to monitor transaction dates and values, ensuring that crypto traders in Kenya remit their taxes accurately. The authority estimates Kenya’s annual cryptocurrency market is worth KSh 2.4 trillion, representing a substantial tax base that could boost overall revenue by an estimated 2.4%.
