Kenya is aiming to tax nearly 4 million digital asset owners under a new law. If law is passed it would put the East African country’s fast-developing economy under regulatory scrutiny for the first time.
Abraham Kirwa, a politician from the governing Kenya Kwanza Alliance, has introduced the Capital Markets (Amendment) Bill, 2022. Also, according to Business Daily, it intends to
- tax digital asset exchanges,
- wallet companies, and
Moreover, if the bill passes, the Kenya Revenue Authority will collect capital gains from any Kenyan who sells a virtual asset that has increased in value.
The measure would be the country’s first law addressing the digital asset industry if passed. Kenya has recently experienced a surge in digital asset adoption. It has risen to the top of the worldwide P2P trading volume chart for 2020 and 2021. Further, this year’s Chainalysis Global Crypto Adoption Index ranks the country in the top 20 globally.
Despite this acceptance, Kenya has failed to enact any industry-governing legislation. Thousands of investors have lost money in digital asset frauds. For ex. Nurucoin, a local enterprise that unexpectedly shut down with $27 million in investor cash.
Bill stipulates that every Kenyan who trades in digital assets must submit [the tax agency] with the following details for tax purposes:
- any expenditures associated with the transaction
- the amount of any gain or loss on the transaction, and
- the number of the transaction’s revenues
Aside from taxes, the new measure aims to safeguard Kenyan investors in digital assets. Further, it would change current legislation to classify digital assets as securities, putting them under the jurisdiction of the Capital Markets Authority (CMA). A central electronic registry of all transactions involving digital assets is also to be kept by the CMA.