Kenya Cashes in $77 Million from Crypto Traders, Eyes Big Tax Boost

Reports have revealed that Kenya Revenue Authority collected $77.5 million from 384 crypto traders in the 2023-24 financial year. This is allegedly believed to be the government’s move to tap into Kenya crypto growth and KRA’s plan to scale up tax revenues from crypto in the coming years. They have reportedly set a long term target of collecting over $465 million from crypto transactions.

Kenya Crypto Revenue Targets

KRA crypto-taxation is part of their overall revenue target of $ 158.8 billion over the next 5 years. With Kenya emerging as one of Africa’s biggest crypto markets, this is a valuable yet complex area for the government to tap into. KRA Head Anthony Mwaura said they are committed to growing revenue from crypto traders.

Speaking at a taxpayer appreciation event, Mwaura said they have received positive feedback from the initial collection, while acknowledging the potential and challenges in bringing more into the tax net in the crypto space.

The Kenyan government has recognized that more needs to be done to achieve these targets. Mwaura said KRA is thinking of installing a real-time tax system that will be linked to cryptocurrency exchanges. This will enable KRA to monitor transaction details such as time and value for more transparency and better revenue collection.

Overcoming Regulatory Hurdles in Kenya Crypto Taxation

Kenya’s crypto market is growing but several factors have hindered KRA’s efforts to collect taxes so far. Most transactions are outside of regulations due to lack of proper legal framework. This makes it hard to track and monitor crypto trading activities. Low public awareness of tax obligations in the crypto space and inherent volatility of cryptocurrencies makes tax enforcement even more complicated.

Advertisement Banner

The first step towards formalizing crypto tax collection was the 1.5% digital tax on crypto exchange revenues which kicked off last year. But despite this, KRA has found it hard to get full compliance as most crypto users are either unaware or unsure of their obligations. Mwaura thinks stronger policies and civic education can help bridge the gaps for better compliance in the future.

Leveraging Technology for Enhanced Tax Collection

The KRA will further strengthen this by introducing machine learning, artificial intelligence (AI) and data analytics. These will help identify taxable crypto transactions with ease and therefore tax compliance.

Commissioner General Mr. Wattanga said these digital tools can give insights into trading behavior which will enable KRA to predict and target revenue opportunities better.

This is a broader trend in how governments are approaching taxation, with data-driven and AI approaches becoming more prominent in finding new sources of revenue, especially in emerging markets.

Conclusion

Kenya’s crypto taxation is part of the bigger picture in Africa, where several countries are starting to see digital assets as a driver of economic growth. This Kenyan strategy will involve watching how other countries that have also adopted blockchain and crypto will move. By being proactive, they will be at the forefront of the crypto regulatory landscape in Africa and possibly set a precedent for other countries to follow as they move to their own digital taxation.

For Kenya, $77.5 million is just the starting point in long-term crypto taxation. With plans to introduce real-time systems and advanced tech solutions, Kenya aims to strengthen tax compliance and fully harness the potential of its growing cryptocurrency market.

TheBITJournal is available around the clock, providing you with updated information about the state of the crypto world. Follow us on Twitter and LinkedIn, and join our Telegram channel.