The Kenya Revenue Authority (KRA) successfully collected Ksh 10 billion from cryptocurrency traders during the financial year that concluded in June 2024.
This achievement occurred as the KRA implemented digital technologies aimed at identifying individuals and entities that utilize virtual assets to avoid tax obligations.
Cryptocurrencies represent digital currencies that are neither issued nor regulated by any central banking authority globally.
They are primarily traded online for profit or utilized for international transactions.
During the Taxpayers’ Day celebration held at State House in Nairobi on Saturday, KRA chairman Anthony Mwaura announced that, for the first time, the cryptocurrency sector had made a significant contribution to the national tax revenue.
“In the last financial year … we had 384 (cryptocurrency) customers, and they were able to contribute Ksh 10 billion,” he said.
The extent to which the payment was made voluntarily by the cryptocurrency dealers remains uncertain; however, Mwaura disclosed that initiatives are already in progress to increase tax revenue from the industry, which has historically posed challenges in terms of taxation.
“We have agreed with our Commissioner-General, I talked even to the Governor of Central Bank, the deputy governor so that we can have a joint technical committee to explore all the means… These people of cryptocurrencies, they want to pay taxes, but we’re unable to reach them.
“If we are able to talk and agree with the central bank within this year, and be able to talk to those people who deal with Bitcoin and everything, we will be able to net Ksh 60 billion,” he said.
The Finance Act of 2023 has established a taxation framework for the cryptocurrency sector, imposing a 3.0 percent tax on the transfer or exchange of digital assets.
Nevertheless, there has been no effective system in place to monitor transactions within this industry.
The overall contributions indicate that, over the course of the year, these “customers” have provided an average of Ksh 26 million to the tax authorities, equating to approximately Ksh 2.17 million monthly.
It remains ambiguous whether the “customers” mentioned by the KRA chairman were individuals or organizations, as well as the specific type of tax they were liable for.
This notable revenue collection occurs despite the absence of a structured taxation framework for the sector and a Central Bank of Kenya (CBK) advisory warning commercial banks against engaging with any entities or individuals involved in cryptocurrency transactions.
The anticipated Ksh 60 billion revenue from regulating crypto dealers could increase tax income by around 2.4 percent, sufficient to cover the authority’s total annual expenses, thereby underscoring the potential benefits of taxing this clandestine industry.
