(Nairobi) – The Kenya Revenue Authority (KRA) has set an ambitious target to collect KSh 60 billion in tax revenue from the cryptocurrency sector in the current financial year. The announcement, made during the recent Taxpayers’ Day celebrations, comes as KRA eyes Kenya’s rapidly growing crypto market, where they reported collecting KSh 10 billion in the financial year that ended in June.
This increased focus on crypto taxation follows the introduction of a 3% tax on the transfer and exchange of digital assets, including cryptocurrencies, as part of the Finance Act 2023. The new taxation approach reflects a broader government strategy to increase revenue from digital asset transactions in a largely unregulated sector. While the 3% levy represents a first step, KRA acknowledges that it faces challenges in fully capturing all transactions due to gaps in regulation and limitations in the banking sector’s involvement.
KRA Chairman Anthony Mwaura highlighted the need for a collaborative effort to achieve the agency’s tax goals for the sector. He mentioned that KRA has already engaged with the Commissioner-General, the Central Bank of Kenya (CBK), and other financial regulators to form a technical committee that will work on strengthening tax compliance among cryptocurrency dealers.
Despite cryptocurrencies being legally taxable under Section 3 of the Income Tax Act, they remain unregulated by major financial authorities like the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA). Cryptocurrencies such as Bitcoin continue to grow in popularity globally, with one Bitcoin currently valued at approximately KSh 9.8 million, further fueling interest and investment in this asset class among Kenyans.
| Key Figures | Details |
|---|---|
| Current Tax Collected | KSh 10 billion |
| Tax Target for FY | KSh 60 billion |
| Crypto Market Value | KSh 2.4 trillion annually |
| Tax on Transfers | 3% on digital asset transactions |
To support its efforts, KRA plans to integrate its systems with various cryptocurrency exchanges to monitor transaction values and dates accurately. This move would help ensure that traders comply with tax obligations in line with the new policies. KRA estimates that Kenya’s cryptocurrency market is valued at around KSh 2.4 trillion annually, representing a significant tax base. Tapping into this market could increase Kenya’s total tax revenues by approximately 2.4%, highlighting the potential impact of this initiative on national revenue.
With over 700,000 cryptocurrency traders in Kenya, KRA’s efforts aim to capture what it terms a “fair share” of taxes.