Kenya will soon start taxing crypto traders after the country’s Parliamentary Financial and National Planning Committee gave the go-ahead for the publication of the amended Capital Markets Bill.
The proposed bill is seeking for the introduction of taxes on crypto exchanges, and digital wallets. The proposed new taxation regime will be similar to the excise duty imposed on bank transactions.
If the bill is signed into law, it will empower the Kenya Revenue Authority to enforce taxation on Kenyans who own cryptocurrencies.
The proposed law also suggests that digital currencies be incorporated into the definition of securities. This will be achieved by making amendments to Cap 485 of the Capital Markets Act.
Kimani Kuria, the committee chairman said that the proposed law is critical because it will shield the country against terrorism and crime funding. He added that while millions of citizens are currently trading in digital coins, there is no law regulating their activities.
The Kenyan government has been skeptical of Cryptos in the past
These new developments come despite the country’s Interior Security Cabinet Secretary, Kithure Kindiki stating in the past that the government has no plans of allowing cryptos in the country, because of their opaque nature.
According to the official, cryptocurrency has the potential to be used for money laundering, and funding terror activities.
The government has had issues in the past with Sam Alman’s crypto project, WorldCoin. When the project landed in the country, the government banned it, citing concerns over its collection of biometric data.
The government halted WorldCoin’s activities, saying it wanted to probe the company over the safety of the data being collected, and what the investors plan to do with it.
By the time its activities were halted, WorldCoin had already collected data from over two million Kenyans.
Kenya could potentially collect billions in taxes from crypto trading
Earlier this year, the BlockChain Association of Kenya informed the Parliamentary Finance Committee that despite collecting revenue from its clients, the association cannot remit the proceeds to the treasury.
This is because, according to them, the Central Bank of Kenya issued a circular that disallowed financial institutions from allowing firms that deal in digital wealth form operating bank accounts.
The circular was issued in December 2015, and warned Kenyans to not use, hold, or trade on virtual currencies.
It is estimated that close to Ksh3 trillion ($19 billion) in cryptocurrencies has been transacted between July 2021 and June 2022.
Kenya is yet to recognize Bitcoin or any cryptos as a legal tender.
