KRA New Proposed Tax Law Could Affect Crypto Platforms in Kenya
January 09, 2021 9:42 AM
Kenya Revenue Authority (KRA) has announced new regulations that mandate users of digital marketplaces to pay digital tax in the country.
According to a report, the KRA will create a special tax unit to track and tax transactions using “data-driven detection.”
However, the report states that “at this stage, the precise meaning of a digital market place and those who will be impacted by the digital tax is largely unclear.”
Kenya’s Finance Act broadly defines digital marketplace “as a platform that enables the direct interaction between buyers and sellers of goods and services through electronic means.”
The report asserts that cryptocurrency platforms “fall under the digital marketplace designation since they offer a platform for buyers and sellers of crypto through electronic means.”
Like many other countries on the African continent, blockchain is not yet regulated as most African nations struggle to catch up with the industry development speed, Kenya is not an exception and cryptocurrency are not yet regulated although the report notes the KRA has been pushing the central bank to recognize these assets for revenue collection purposes.
Commenting on the lack of clarity of the new regulations, David Gitonga, founder & Managing Editor at Bitcoinke, says the digital tax will nudge Kenya towards the regulation of cryptocurrencies.
“I think this bill is going to put a spotlight on many digital activities, including crypto trading, and this might open the door to some form of crypto regulation,” said Gitonga.
He goes on to explain that “crypto regulation has long been ignored because there is a general lack of understanding of how fast this space is growing in Kenya.”
Kenya is consistently ranked as among the top five African countries with high volumes of bitcoin p2p trading.
As the Kenyan government has been looking for more ways to raise tax revenues, Gitonga believes “they will now give the crypto space a second look once they realize revenues that are being generated, especially on P2P platforms operating in Kenya.”