AFRICA: Kenya Implements Real-Time Crypto Tracking for Better Tax Compliance

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.

20 January 2024

ARBITRATION: ICC brings Advanced Arbitration Academy programme to Africa and Middle East

Following successful launches in Asia, Eastern Europe, Latin America and North America in 2023, ICC is expanding its Advanced Arbitration Academies training programme to include Africa and the Middle

Read More
16 May 2024

EU: ESMA confirms ESG and sustainability fund naming rules

ETFs using the term ESG or sustainable in their name must have at least 80% of investments tied to environmental or social characteristics, according to the EU’s new fund naming rules. The European

Read More
16 August 2024

UK: Labour Announces Crackdown On Tax Dodgers To Plug £2bn Spending Hole

Labour has revealed it will plug the £2bn hole in its spending commitments by cracking down on tax dodgers. Keir Starmer and shadow chancellor Rachel Reeves have promised a Labour. government will

Read More
8 August 2024

US: SEC Urges Court to Block Coinbase’s Extensive Document Demand

The SEC argues that Coinbase’s request is overly broad, seeking nearly all documents related to crypto assets. In its court filing, the SEC stated that it has already provided Coinbase with various

Read More