At least four million Kenyans who own digital currencies famously known as cryptocurrency now face taxation if MPs approve changes to the law aimed at regulating and taxing the sector.
According to the changes suggested in the Capital Markets (Amendment) Bill, 2022, the government through the Kenya Revenue Authority (KRA) will start taxing crypto exchanges and digital wallets.
If the changes sail through, Kenyans will pay the KRA capital gains for the increased market value of the crypto when they sell or use the digital currencies in a transaction.
“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,” the Bill, sponsored by Mosop MP Abraham Kirwa, says.
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Those who have made trading crypto a business are likely to be charged income tax from what they earn in the business.
Kenyans who own or deal in digital currency will be required to provide the Capital Markets Authority (CMA) with specific information for tax purposes.
“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,” the Bill states.
According to a recent report by the United Nations, Kenya has the largest share of its population with cryptocurrencies in Africa.
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Anyone trading crypto will be required to have licences, just like in other sectors.
“Within six months of the enactment.. a person trading in digital currencies shall apply to the Authority for a licence,” the Bill says.
The CMA will ensure Kenya has a centralised electronic register of all transactions in digital currencies.
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