Kenya Debates New Crypto Tax Bill

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Lawmakers in Kenya are debating the Capital Markets (Amendment) Bill 2022, which aims to introduce a crypto tax on crypto exchanges, digital wallets and individual transactions. Local publication Business Daily reports that a bill sponsored by MP Abraham Kirwa seeks to introduce a 20% excise tax on every cryptocurrency transaction carried out in the country.

According to the Bill, if a person holds digital currency for less than a year, they will have to pay income tax, but if the period exceeds 12 months, the capital gains tax will apply instead.

The new bill comes almost two years after Kenya came up with it the Digital Services Tax (DST) under the country’s Finance Law 2020. DST came into effect in January 2021 and introduced a 1.5% tax on services including crypto transactions carried out through digital markets.

Meanwhile, Kenya’s proposed plan to amend its capital market law to introduce crypto taxation comes five months after the United Nations Conference on Trade and Development (UNCTAD) called on developing countries ensure comprehensive financial regulation by mandating the registration of crypto exchanges and digital wallets.

UNCTAD also requested that developing countries make the use of cryptocurrencies less attractive “by charging entry fees for crypto exchanges and digital wallets and/or imposing financial transaction taxes on trading cryptocurrencies.” This is even because a recent UNCTAD report notes that Kenya with 4.25 million people or 8.5% of its population involved in cryptocurrencies has the highest crypto adoption in Africa.

Africa and Crypto Regulation

According to the Chain Analysis 2021 Global Crypto Adoption Index, Kenya, South Africa and Nigeria rank among the top 10 countries in the world in terms of cryptocurrency usage. Africa is also among the fastest growing cryptocurrency market among developing economies and the third largest growing market in the world.

In April, the Central African Republic, one of the poorest countries in the world free from decades of conflict, announced that it adopted Bitcoin (BTC) as legal tender. However, not all countries in the continent are open to the use of cryptocurrency. While 4 African countries, Algeria, Egypt, Morocco and Tunisia, have placed an absolute ban on cryptocurrency, 19 countries, including Nigeria, Africa’s largest economy, have placed implicit restrictions on digital assets.

Lawmakers in Kenya are debating the Capital Markets (Amendment) Bill 2022, which aims to introduce a crypto tax on crypto exchanges, digital wallets and individual transactions. Local publication Business Daily reports that a bill sponsored by MP Abraham Kirwa seeks to introduce a 20% excise tax on every cryptocurrency transaction carried out in the country.

According to the Bill, if a person holds digital currency for less than a year, they will have to pay income tax, but if the period exceeds 12 months, the capital gains tax will apply instead.

The new bill comes almost two years after Kenya came up with it the Digital Services Tax (DST) under the country’s Finance Law 2020. DST came into effect in January 2021 and introduced a 1.5% tax on services including crypto transactions carried out through digital markets.

Meanwhile, Kenya’s proposed plan to amend its capital market law to introduce crypto taxation comes five months after the United Nations Conference on Trade and Development (UNCTAD) called on developing countries ensure comprehensive financial regulation by mandating the registration of crypto exchanges and digital wallets.

UNCTAD also requested that developing countries make the use of cryptocurrencies less attractive “by charging entry fees for crypto exchanges and digital wallets and/or imposing financial transaction taxes on trading cryptocurrencies.” This is even because a recent UNCTAD report notes that Kenya with 4.25 million people or 8.5% of its population involved in cryptocurrencies has the highest crypto adoption in Africa.

Africa and Crypto Regulation

According to the Chain Analysis 2021 Global Crypto Adoption Index, Kenya, South Africa and Nigeria rank among the top 10 countries in the world in terms of cryptocurrency usage. Africa is also among the fastest growing cryptocurrency market among developing economies and the third largest growing market in the world.

In April, the Central African Republic, one of the poorest countries in the world free from decades of conflict, announced that it adopted Bitcoin (BTC) as legal tender. However, not all countries in the continent are open to the use of cryptocurrency. While 4 African countries, Algeria, Egypt, Morocco and Tunisia, have placed an absolute ban on cryptocurrency, 19 countries, including Nigeria, Africa’s largest economy, have placed implicit restrictions on digital assets.

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