Tracking crypto transactions in real-time is something the Kenya Revenue Authority (KRA) is doing in big measure. This action is meant to solve the rising tax losses in the nation resulting from ineffective monitoring of the developing crypto market.
Given Kenya’s crypto sector’s projected Ksh 2.4 trillion in transactions between 2021 and 2022—about 20% of the country’s GDP—a more strong tax collection mechanism becomes absolutely vital.
Real-Time Tracking for Crypto Transactions to Enhance Tax Compliance
To gather important transaction data, including the time, date, and value of every operation, the new tax system will interface with crypto markets and exchanges. Preventing tax avoidance and making sure all income connected to cryptocurrency is taxed in line with Kenya’s Income Tax Act are the main goals of the KRA.
Though organizations like the Capital Markets Authority or the Central Bank of Kenya mostly control them, profits from cryptocurrency transactions are legally taxable.
This legislative change coincides with the growing popularity of cryptocurrency in Kenya, despite not being as common as other financial innovations like mobile money.
Mostly because digital currencies have cheaper fees and simplicity of cross-border money transfers than conventional banking systems, many people utilize them to save money, send remittances, and make overseas purchases.
But because of their distributed character, cryptocurrency have also drawn appeal to people engaged in illicit operations such as money laundering and fraud.
Apart from real-time tracking, the KRA intends to improve tax compliance using artificial intelligence (AI) and machine learning technologies. These technologies will enable the authority to identify fraudulent behavior and maximize resource allocation, thereby perhaps recovering billions of tax-lost income.
The KRA has a larger reform agenda, including this technical makeover to modernize its systems and raise general tax collecting efficiency.
Simultaneously, comparable initiatives are under progress abroad. For instance, as we previously highlighted, Italy has suggested taxing crypto’s capital gains between 26% and 42%.
This action might fundamentally change the scene of European crypto investment since it will force investors to look for better tax conditions outside than Italy.
Aiming to support the expansion of its digital currency industry, Japan’s Financial Services Agency (FSA) is also contemplating a uniform 20% tax on crypto transactions, according to CNF.
US Treasury once again proposes new crypto tax rules to “modernize” code. In an effort to keep pace with the rapidly evolving digital currency landscape, the US Treasury has once again put forth
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