On Nov. 21, Kenya’s Capital Markets Act introduced an amendment requiring those who own or trade cryptocurrencies to provide the country’s Capital Markets Authority with information about their tax activities, local media reported. Report. This is the first time Kenya has extended financial regulation to cryptocurrencies.
Under the Capital Markets (Amendment) Act, Kenyans are required to pay capital gains tax to the Kenya Revenue Authority when they sell or use digital currencies. Cryptocurrencies held for less than a year will be subject to income tax, while capital gains tax will apply thereafter. Income tax rates in Kenya range from 10% to 30%. Banks already impose a 20% excise tax on all commissions and fees on crypto transactions.
Kenya Revenue Authority (KRA) to go after over 4 million Kenyans for ownership #encryptionif MPs approve changes to the Capital Markets (Amendment) Act 2022, aimed at regulating and taxing the fast-growing digital currency trade. pic.twitter.com/LRlAgPJucJ
— Updates by Njeru (@NjerusUpdates) November 21, 2022
The bill’s author, MP Abraham Kirwa, said:
“The amendment will provide […] A definition of digital currency, which is created through cryptomining, and provides regulations on digital currency transactions. […] The amendment will also outline the responsibilities of individuals or businesses transacting in digital currencies, regulate their taxation, ownership and promote innovation in the field. “
The bill defines digital currencies as securities, provides licensing for individual cryptocurrency traders, and establishes a centralized electronic registry of digital currency transactions in the country. It will also introduce consumer protection measures, such as “protecting investors from financial loss due to the failure of a licensed broker or dealer” and privacy guarantees, by setting up a fund.
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A Chainalysis survey released in September ranked Kenya 19th globally for cryptocurrency adoption and fifth globally for peer-to-peer transactions.The proposed amendments come alongside calls by Kenyan President William Ruto double the country’s tax base. The country has about 4 million cryptocurrency users. About 8.5% of the total population, Give Kenya has the fifth highest rate in the world.