The Kenyan government intends to tax crypto transactions on all exchanges in the nation, despite the global cryptocurrency market’s massive collapse.
Planned changes to the capital markets legislation and the introduction of a 20% excise tax on all cryptocurrency transaction fees are largely seen as an inadequate effort by the new administration to limit foreign borrowing by extending the local tax base.
If the measure receives parliamentary approval, Kenyans would be required to pay capital gains tax or income tax to the Kenya Revenue Authority for the sale or usage of cryptocurrencies. It reads: “If digital money is kept for a time not exceeding 12 months, income tax regulations apply, and where digital currency is retained for a period surpassing 12 months, capital gains tax laws apply.”
By enacting the legislation, Kenya, whose central bank has warned its people against the usage and trading of cryptocurrencies, would follow in the footsteps of Ethiopia, which initially outlawed cryptocurrencies before regulating them. The Singapore-based crypto research firm Tripple-A claims that there are 6.1 million crypto traders in Kenya, out of a population of around 55 million.
The bulk of Kenyan crypto optimists has observed the price of bitcoin fall below $16,000 on November 21 in a bear market that is expected to linger for many months. Having lost money in crypto earlier this year and now being unable to withdraw their funds due to the current FTX crash, many crypto traders are outraged by the government’s recent action.
This charge will be passed on to users on centralized exchanges who are unaware. Mark Kajuye, a Nairobi-based crypto trader, tells Quartz that the majority of decentralized platforms are not Kenyan, and hence the government has no authority over them.
Also Read: Binance Overtakes Coinbase As The Largest Bitcoin Reserve Holder
Wallets