The Kenya Revenue Authority (KRA) is not receiving billions of shillings in taxes from crypto players because of a circular that prohibits banks from doing business with the sector.
The Block Chain Association of Kenya informed the Finance Committee of the National Assembly that although it collects taxes from its customers, it has not yet sent in the three percent it has taken from Kenyans who sell digital assets.
The lobby informed lawmakers that a Central Bank of Kenya (CBK) circular prohibiting banks from holding accounts for companies that deal in virtual assets was the reason behind their decision to withhold taxes from over four million Kenyans who deal in cryptocurrencies like Bitcoin.
We have withheld the tax since the digital asset tax (DAT) came into effect on September 1, 2023. The CBK told banks not to touch the Cryptocurrencies. The CBK blocked us from holding bank accounts. He however declined to disclose how much the industry was sitting on in collected but unremitted taxes.
KRA has imposed a three percent tax on gross fair market value of the DAT that is to be remitted within five working days. But we have not remitted any money.
We want to be regulated and taxed. We want to be licensed to operate. The biggest challenge with crypto is to be understood
According to him, his association wants MPs to do away with the DAT, claiming it was ruled illegal since taxing Gross Fair Market Value might potentially tax businesses that are losing money.
Scrap off DAT. Taxation of capital was ruled unconstitutional in the Kenya Revenue Authority vs Stanley Waweru and six others (Article 201(b) (1) of the Constitution of Kenya.Alan Kakai
Nearly Sh3 trillion in transactions took place in Kenya between July 2021 and June 2022, according to Mr. Kakai.
We need to have enacted the Digital Assets Act by July next year. We may have Kenyans who have lost their money. It could also have been used as a conduit of money laundering.Kuria Kimani, Chair National Assembly’s Finance Committee
The Finance Act of 2023 imposed a three percent tax on the profits that owners of cryptocurrencies make from the sale of digital assets. Those that trade non-fungible tokens (NFTs) are also impacted by the new tax. KRA Crypto Taxes
The Finance Act defines a digital asset as anything of value that is not material, including token codes, numbers, and cryptocurrency that are stored digitally and produced using cryptography.