Kenya expects revenue worth $46 Million with the entry of New Tax Targeting Crypto Exchanges

A new tax is being planned that will target cryptocurrency exchanges and various other online services
  • The Kenya Revenue Authority (KRA) is looking forwards to capitalise on the respective tax and earn upto 5 billion Kenyan shillings within the first half of 2021, claims a top KRA official
  • Supposedly the digital asset exchanges, both local and foreign, will be liable to pay the new tax to the government of Kenya. 
  • The commissioner of the domestic taxes department commented that tax represents a suitable response to the development of digital activity in the East African country
  • The inside Kenya has responded to the new tax measures with mixed feelings

The digital tax service (DST) advanced into action on January 2, 2021 despite its initial proposal in August 2020. With every crypto sale, the tax is levied on the gross transaction value at the rate of 1.5%. Coming to the new tax which is being discussed, all the digital asset exchanges setup in the country will have to submit the respective tax to the Kenyan government. It will be essential to pay the tax each month for the foreign exchanges including the peer-to-peer platform Panful and Binance.

Expectations associated to the New Tax

Rispah Simiyu explained the vitality of this newly introduced tax in her her recent op-ed article for Business Daily. Being the commissioner of the domestic taxes department at the Kenya Revenue Authority, she commented that the tax will prove to be a worthy response to the growth of digital activity in the continent’s third largest crypto economy, Kenya. Calling the new tax a “remarkable step for Kenya,” Simiyu also implies that the DST will benefit the Kenyan government with $45.5 million in revenue within the first half of the year.

Response to the New Tax

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Kenya ranks third in the list of biggest Bitcoin markets in Africa. Over the past five years, Kenyans have dealt with $55.3 million worth of bitcoin, singularly on the Paxful P2P exchange. Meanwhile, the response to the currently introduced tax measures ensued mixed reactions from inside Kenya. 

A tax expert with PWC Kenya, Lawrence Mungai, suggested that the country wished to bring “under the tax net enterprises operating within the digital economy that have little or no presence in the market jurisdiction.” Yet, he remains unsure if these proclaimed goals will be achieved given the variety of models undertaken by stakeholders in the digital economy on the global level. On the other hand, a report of a local TV station claimed that the members of the digital economy have anticipated a different consequence with a warning that the “new tax might derail growth” of the nascent sector.

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Steve Anderrsonhttp://www.thecoinrepublic.com
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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