Kenya is attempting to tax more than 4 million owners of digital assets through a new bill that, if passed, will put this quickly expanding sector under regulatory scrutiny for the first time ever in the East African nation’s history.
Capital Markets Amendment Bill 2022
Abraham Kirwa, a lawmaker from the governing Kenya Kwanza Alliance, recently introduced the Capital Markets (Amendment) Bill, 2022. Traders, wallet providers, and exchanges for digital assets are all targeted for taxation, according to a local news source called Business Daily.
If the law passes through parliament, every Kenyan who sells a digital asset that has appreciated in value will be required to pay capital gains to the Kenya Revenue Authority (KRA).
According to the proposed bill, the regulations relating to income tax or capital gains tax, depending on how long the digital currency is held for, must apply where it is held for a period of time less than or equal to twelve (12) months.
Kenya Tops Peer-to-Peer Trading Volume Charts
If passed, the law will be the nation’s first piece of legislation specifically addressing the digital asset market. Over the past several years, the adoption of digital assets has exploded, with Kenya topping the global peer-to-peer trading volume chart in 2020 and 2021. The nation also ranks in the top 20 globally for adoption in this year’s Chainalysis Global Crypto Adoption Index.
The East African country now seeks to recognize the sector through this new piece of legislation. According to the law, every Kenyan who transacts in digital assets must “present [the tax agency] with the following information for tax purposes—the amount of revenues from the transaction, any expenditures linked to the transaction, and the amount of any gain or loss on the transaction.”
The new bill aims to safeguard Kenyan investors in digital assets in addition to taxation. Changing the current legislation to classify digital assets as securities, will put them under the control of the Capital Markets Authority (CMA). The CMA must also maintain a consolidated electronic register of all transactions involving digital assets.
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