The Kenya Revenue Authority (KRA) has introduced a new tax system that will monitor crypto transactions in the country in real time to maximize tax revenue and perfect the tax program.
The KRA has turned its sights on crypto users in the East African country which is one of the top 5 African countries by crypto adoption.
Kenya at the moment has over 4 million crypto users one of the highest in Africa hence presenting a lucrative opportunity for the KRA to maximize tax returns.
The KRA revealed that Kenya’s crypto transactions in 2022 were valued at around $18.6 billion (KES 2.4 trillion). The stated figure is probably higher than the transaction volume handled by some commercial banks in the country.
The system shall integrate with cryptocurrency exchanges and marketplaces to track and record cryptocurrency transactions. It shall capture transaction details, including transaction date, time, type, and value,” The KRA said in a document revealing their tax collection strategies for the financial year 2024/25.
The Crypto industry in Kenya is still largely unregulated and the legal status of cryptocurrency in the country is unknown.
The regulatory authorities in Kenya like the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK) have put in minimal efforts to regulate the industry in the country despite its growing popularity.
Crypto exchanges like Binance and Coinbase enjoy a sizeable chunk of the market share here in Kenya each doing large volumes of trade daily.
Among Kenya’s crypto enthusiasts, P2P is quite popular, and it’s a major means of transaction between buyers and sellers of crypto.
The combination of P2P and Mobile money is used to bypass regulators with the KRA stating that the agency has been unsuccessful in tracking and taxing transactions due to its use of an outdated system.
The agency reiterated that earnings from crypto transactions can be taxed as per section 3 of Kenya’s Income Tax Act.
“The goal is to have a robust and efficient system that will enable KRA to collect taxes on cryptocurrency effectively and efficiently,” KRA said.
A Chainalysis report revealed that most Kenyans especially the young ones with crypto holdings buy them to preserve savings. Crypto holders use their assets commercially for buying and selling goods or for international remittances.
It is to be noted that the legal status of cryptocurrency in the country is still unclear despite being one of the top 5 countries in Africa by crypto adoption.