Kenyan government announces better revenue from cryptocurrencies traded, collecting $77.5 million (10 billion shillings) during the fiscal year of 2023-24. Anthony Mwaura, head of the Kenya Revenue Authority (KRA), highlighted this achievement during an event honouring Kenyan taxpayers.
He noted the tax was derived from 384 registered cryptocurrency dealers. The KRA aims to grow this revenue and has set a target of more than $465 million in the coming years from cryptocurrency traders.
Kenya’s Growing Interest in Cryptocurrencies
Alongside Nigeria and South Africa, Kenya is among Africa’s largest cryptocurrency markets, with many people owning digital assets. However, Kenya has not yet implemented official regulations to classify cryptocurrencies like Bitcoin or Ethereum as securities.
Similarly, the Central Bank of Kenya (CBK) and its governor have cautioned residents about the risks associated with crypto trading. Despite these warnings, the appeal of digital currency in Kenya continues to grow, making a full crackdown on transactions challenging and creating an opportunity for the government to tax these activities.
The KRA sees cryptocurrencies as a crucial revenue source. The agency’s long-term goal is to collect $158.8 billion over the next five years, with digital assets projected to significantly contribute to this total.
To improve tax collection from the sector, the KRA is considering a real-time tax system that would interface with cryptocurrency exchanges. This system would monitor key transaction information, including time and value, enabling the KRA to assess tax liabilities better.
Kenya’s Future Plans for Cryptocurrencies
Mwaura mentioned that if an agreement is reached with the Central Bank of Kenya, the new system could yield an estimated Sh60 billion (about $465 million) annually for the KRA. Yet, there are still hurdles to effectively taxing cryptocurrency traders.
Kenya currently lacks a comprehensive legal framework for cryptocurrencies, making it challenging for authorities to fully regulate the market. Additionally, low public awareness and the volatility of digital currencies complicate the tax collection process.
Addressing these challenges, KRA Commissioner General Mr. Wattanga noted that the agency would leverage advanced technologies, including machine learning, artificial intelligence, and data analytics.
These tools are expected to help the KRA more effectively track and analyze crypto transactions, ultimately increasing tax compliance. This use of advanced technologies demonstrates the KRA’s commitment to addressing challenges in the digital asset space.
Kenya’s efforts to tax the cryptocurrency market reflect similar initiatives across Africa, as countries work to integrate digital assets into their formal economies. By taxing digital transactions, Kenya aims to secure additional revenue to support public projects and economic growth.
Kenya’s Crypto Tax Plans
The Kenyan Treasury introduced a 1.5% digital tax on revenues generated by cryptocurrency exchanges in early 2023 as an initial step toward formalizing crypto taxation. Yet, the KRA and other regulatory bodies will need to continue navigating the complexities of the rapidly evolving cryptocurrency market, particularly as more Kenyans engage in digital trading.
As the KRA presses forward, Kenya’s approach to cryptocurrency taxation will be a critical area to watch. With strategic reforms and advanced tools, the KRA aims not only to achieve its crypto tax targets but also to position Kenya as a leader in digital tax management across Africa.