A Look at the Amendments
The modifications propose that any individual or company that is involved in dealing with or possessing cryptocurrencies would be compelled to submit information on their actions. This includes providing information about their ownership of cryptocurrencies.
For the purposes of taxation, the information on cryptocurrency ownership and transactions would need to be gathered. The material is already available to the general public in Kenya from various sources within the country's media.
The government of Kenya has made the unprecedented decision to take the first step toward simplifying the procedure of collecting taxes across the country.
The Government of Kenya Is Starting to Show Interest in Cryptocurrency Taxation
The participation of Kenyan citizens or businesses with cryptocurrencies has never piqued the curiosity of the government, nor has it caused it any cause for alarm.
This suggests that the government of Kenya and the regulatory authorities there have come to recognize the significance of cryptocurrencies. They are aware of the potential amount of income that may be generated by the cryptocurrency sector to help enhance their economy.
As a result, the nation is beginning to take an interest in the cryptocurrency industry and is committed to imposing taxes on cryptocurrency-related operations.
Amendment Details
The wording of the legislation imply that individuals who trade in cryptocurrencies and generate capital gains would be required to pay taxes on such transactions and earnings. The Kenyan Revenue Authority is going to be in charge of collecting all of the necessary taxes.
The regulatory body would make sure that individuals and entities that are involved with cryptocurrencies and are making profits pay the appropriate taxes on those profits.
The capital gains would be subject to taxation regardless of whether they were realized through the ownership (holding) of cryptocurrencies or the trading of those cryptocurrencies.
Individuals or companies that have held onto cryptocurrencies for a period of time that is shorter than one year would also be subject to the income tax.
If the cryptocurrencies are held until the end of the time period, then the income tax will be eliminated, but the tax on capital gains will still be in place.
The current ranges of income tax implementations in Kenya are between 10% and 30%. These ranges can be found in the table below. On the other hand, the banks already impose a significant excise duty on their customers that amounts to twenty percent.
All kinds of fees and commissions associated with cryptocurrency trades are subject to the excise duty that has been implemented.
The New Amendment Creates Complications for the Natives
The implementation of income and capital gains taxes by the Kenyan authorities is going to be very harsh considering the number of fees that Kenyans were already required to pay to the country's banks.
Kenya is one of the countries in which residents have discovered that using cryptocurrencies is a way to make improvements to their standard of living. On the other hand, the newly imposed taxes would make it impossible for locals to do that.
After the new taxation laws have been put into place, it is anticipated that the number of people who own cryptocurrencies and the volume at which they trade will drop significantly in Kenya.
Because of this, it is possible that all of the major cryptocurrencies will sustain a significant amount of damage, which will propel the cryptocurrency market into an even more bearish position.
