Kenya proposes to tax crypto trade

Lawmakers in Kenya are currently debating a proposed bill that would allow for the taxation of crypto exchanges, digital wallets, and transactions. The Capital Markets (Amendment) Bill, 2022 aims to expand the tax brackets and enhance revenue collection in the country. With an estimated four million crypto users in Kenya, the government sees this as an opportune time to tap into this emerging source of income. CNBC Africa's Julius Bizimungu spoke to Alice Tomdio of Yellow Card and Joshua Murima of Briter Bridges to delve into the implications of this proposed taxation on the crypto industry. As Benjamin Franklin famously said, 'nothing is more certain than death and taxes,' and it seems Kenya is gearing up to ensure both certainties are covered. Tomdio acknowledged the importance of regulation in legitimizing the crypto industry while emphasizing the need for collaboration and clarity in implementation. She highlighted the importance of understanding the specific use case for crypto in Kenya to ensure compliance and consumer protection. Murima echoed the sentiment of regulation leading to legitimacy in the industry, emphasizing the need for a cohesive approach involving various government bodies like the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK). The proposed taxation has sparked debates regarding the feasibility of taxing and regulating cryptos in a country like Kenya where transactions often cross borders and are perceived as anonymous. However, Tomdio debunked the notion of crypto's anonymity, citing the transparent nature of blockchain technology. She stressed the importance of methodical engagement to prevent market disruptions and enable compliance. The discussion also touched upon the potential impact on crypto investors and traders in the face of new tax regulations. Murima noted that while taxes may be seen as a business expense, it is unlikely to deter crypto adoption significantly. Drawing comparisons with countries like Germany, Switzerland, Singapore, Malaysia, and the United Arab Emirates (UAE) that have embraced tax regulations on crypto, Tomdio highlighted the strategic perspective these nations take to encourage innovation and investment. Countries like the UAE and Singapore aim to be pro-innovation and investor-friendly, using tax policies as tools to attract investment. The proposed taxation on crypto trade in Kenya signals a broader move towards regulation and revenue generation in the burgeoning industry. As the debate continues, stakeholders await further clarity on the specifics of implementation and the collaborative efforts of regulatory bodies.