Kenya’s National Assembly’s Finance and National Planning Committee has approved the publication of the Capital Markets (Amendment) Bill that would enable the taxation of cryptocurrency trading.
The bill, proposed by a local legislator, seeks to introduce taxation of crypto exchanges, digital wallets, and impose transaction taxes akin to excise duty charged on bank transactions. The proposed amendment Bill allows the Kenya Revenue Authority (KRA) to go after Kenyans who own cryptocurrencies to enforce taxation on their crypto holdings.
The proposed amendment aims to incorporate digital currencies into the definition of securities by amending the Capital Markets Act, Cap 485.
“This is a very critical law that will guard our country against proceeds of crime and terrorism financing. Cryptocurrencies are already being traded by millions of Kenyans yet we have no law to govern it. We approve this Bill for publication,” committee chairman Mr Kimani Kuria said.
The committee chairman also said that the changes would provide for governance and oversight in the area that is fast growing and ensure citizens are not exposed to various risks.
“Cryptocurrency is the future. This will be the norm because we will buy and sell using cryptocurrencies. It just takes seconds to transfer a million dollars and nobody is seeing the transaction,” Mr Kirwa told the committee.
“We should be on the frontline in adopting cryptocurrencies like we did with the M-PESA [Safaricom’s money transfer service]. Right now South Africa and Nigeria have legalized cryptocurrencies, yet our Central Bank is dragging its feet. We need to protect our traders from potential losses.”
The sector remains largely unregulated across the world.
The proposed Bill mandates individuals who own or engage in digital currency transactions to submit information to the Capital Markets Authority (CMA) for taxation purposes. Those involved in digital currency activities must provide the regulator with details such as:
- The amount of virtual currency in Kenyan shillings
- The type of virtual currency transacted
- The date of acquisition, and
- The date of sale
“A person who possesses or deals in digital currency shall provide the Authority with the following information for tax purposes—the amount of proceeds from the transaction, any costs related to the transaction, and the amount of any gain or loss on the transaction,” the Bill states.
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