The Kenyan government now wants to tax crypto transactions across all exchanges in the country, even as the global crypto market suffers a massive meltdown.
Plans are underway to amend the Capital Markets Act and introduce a 20% excise tax on every crypto transaction fee, in a move widely seen as an ineffective strategy by the new government to reduce foreign borrowing by widening the net national tax.
If the bill is approved by parliament, Kenyans will be subject to remittance of capital gains tax or income tax to the Kenya Revenue Authority for the sale or use of crypto. It reads: “Where digital currency is held for a period not exceeding 12 months, income tax laws apply or for a period longer than 12 months, income tax laws apply. capital gains tax apply.
By introducing the law, Kenya, whose central bank has warned citizens against using and trading crypto, will follow in the footsteps of Ethiopia, which first banned crypto. before regulating it. Singapore-based crypto research firm Tripple-A estimates the number of crypto traders in Kenya at 6.1 millionout of a population of almost 55 million.
Kenyans have seen enough of the crypto drama
But the news was not a welcome message for the majority of Kenyan crypto optimists, who witnessed bitcoin’s price crash. less than $16,000 November 21 in a bear market likely to last several months. Having burned his fingers in crypto earlier this year and now unable to withdraw their balances during the recent collapse of FTX, many crypto traders are furious with the recent government decision.
“This tax will be passed on to unsuspecting users on centralized exchanges. Most of the decentralized platforms are not Kenyan so the government has no jurisdiction to control them,” Mark Kajuye, a Nairobi-based crypto trader, told Quartz.
On social media, the outrage is more amplified, with many users fearing that the government is only interested in taxing the space and not regulating it entirely, to protect traders.
Kenya has one of the most tech-savvy populations in Africa, with strong crypto adoption fueled by reduce the cost of mobile internet, growing internet penetration and relatively high smartphone penetration. But the country’s crypto community may decline in the coming months due to the decline in confidence in crypto investments that has seen over $2 trillion wiped out the global market this year.