HomeRegulationsKenya Revenue Authority to Launch Real-Time Crypto Tax System

Kenya Revenue Authority to Launch Real-Time Crypto Tax System

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Kenya Revenue Authority launches a real-time crypto tax system to track transactions, improve tax collection, and curb tax evasion.

The Kenya Revenue Authority (KRA) is set to introduce a new real-time tax system to track cryptocurrency transactions, aiming to improve tax collection. This system will integrate directly with cryptocurrency exchanges, allowing the KRA to monitor trades and collect taxes effectively.

According to local reports, the move is part of an effort to curb tax evasion in the crypto market. The sector has become a significant concern for authorities. It is largely unregulated, which makes it vulnerable to exploitation by criminals involved in activities such as theft, fraud, and money laundering.

Kenya Targets $18.5B Crypto Market with New Tax Tracking System

The KRA aims to collect all transaction information, such as the transaction date, time, type, and amount. This information will be important when determining when to charge taxes in the emerging cryptocurrency market. The KRA, in a document on its strategies for the 2024/25 financial year, affirmed that the new system would assist in tracking and documenting cryptocurrency trades.

The KRA also noted that cryptocurrency usage is rapidly increasing in Kenya. Between 2021 and 2022, the crypto market trade in Kenya reached KES 2.4 trillion ($18.5 billion), which is approximately 20% of Kenya’s GDP. This market growth has underlined the need for the KRA to implement a mechanism for tracking transactions to collect taxes.

Despite the lack of regulation of the cryptocurrency market by bodies like the CBK and the CMA, the KRA categorically says that income earned through cryptocurrency trades is still taxable income. The lack of a fixed system to collect these taxes from such transactions has been a major cause of revenue loss to the government.

The planned system will record transactions and calculate taxes according to Kenyan laws. It will generate tax notices and statements for taxpayers and thereby assist in promoting compliance.

However, the KRA is now designing a system that will, in the end, help to collect efficient revenues from the increasing cryptocurrency business. This comes in the wake of a recent call by Finance Minister John Mbadi to adopt new technologies, such as blockchain, to ease the trading system and improve domestic resource mobilization. This is as Kenya opens up to the digital evolution, and given the market, it will inevitably boost government revenue collection.

 

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