A bill classifying crypto assets as securities and imposing capital gains tax has progressed through a Kenyan parliamentary committee.
The Capital Markets (Amendment) Bill, 2023, endorsed by the National Assembly’s Finance and National Planning Committee, will move to the National Assembly for further consideration.
According to Committee Chairman Kimani Kuria, the bill is crucial for combating crime and terrorism financing:
“This is a very critical law that will guard our country against proceeds of crime and terrorism financing. Cryptocurrencies are already being traded by millions of Kenyans yet we have no law to govern it. We approve this Bill for publication,”
If passed, Kenyans would pay capital gains on crypto transactions, with banks deducting 20 percent excise duty on associated commissions and fees.
Following the committee’s approval, the Capital Markets (Amendment) Bill, 2023, is set for discussion in the National Assembly, marking a step toward regulating cryptocurrency activities in Kenya.
Tax Framework for Crypto Assets
The bill proposes amendments to the country’s tax code, introducing taxes on crypto assets held on exchanges and digital wallets.
Kenyans would incur capital gains taxes when selling or using crypto in transactions, requiring them to declare all crypto assets and their values to the Kenya Revenue Authority.
If the bill is approved, Kenyan citizens will need to disclose the value of all their crypto assets in Kenyan shillings to the Kenya Revenue Authority, as stated in the report.
The bill specifies:
“A person who possesses or deals in digital currency shall provide the Authority with the following information for tax purposes—the amount of proceeds from the transaction, any costs related to the transaction and the amount of any gain or loss on the transaction.”
The proposed framework aims to bring transparency to the crypto market and enhance regulatory oversight.
Global Efforts to Regulate Crypto Assets
While Kenya is in the early stages of implementing crypto taxes, tax authorities in various countries have intensified efforts.
For example, the United Kingdom’s His Majesty’s Revenue and Customs are enforcing accurate reporting of crypto holdings, signaling a broader global trend in crypto taxation compliance.