The Finance and National Planning Committee of Kenya's National Assembly has given the nod to a bill that seeks to categorize crypto-assets as securities and impose capital gains taxes on them. The move marks a significant step in the regulation of cryptocurrencies within the country's legislative framework.
Reported on December 4 by Kenya's "Business Daily," the "Capital Markets (Amendment) Bill 2023" received approval from the committee. Kimani Kuria, the committee's chairperson, highlighted the bill's importance in safeguarding the nation against criminal proceeds and the financing of terrorism, stating the necessity for legislation given the growing involvement of millions of Kenyans in cryptocurrency trading.
Following the committee's approval, the bill will advance to the National Assembly, Kenya's lower house of parliament, for further review. The proposed amendment aims to modify the country's tax laws by levying taxes on crypto assets held in digital wallets and exchanged on cryptocurrency platforms. It introduces capital gains tax obligations for Kenyan citizens when they sell or utilize cryptocurrencies in transactions.
Although the comprehensive text of the bill has not yet been disclosed, the report suggests that banks will impose a 20% excise tax on commissions and fees associated with cryptocurrency transactions, as outlined by the "Business Daily."
Should the bill secure passage, individuals in Kenya will be mandated to declare their cryptocurrency holdings and their corresponding value in Kenyan shillings to the Kenya Revenue Authority. An excerpt from the bill emphasizes the requirement for individuals dealing with digital currencies to furnish the tax authority with trading proceeds, associated expenses, and any gains or losses incurred during trading activities.
While Kenya is in the process of implementing cryptocurrency taxation, tax authorities in various nations have shown a keen interest in pursuing individuals who have not accurately reported their cryptocurrency holdings. For instance, HMRC in the UK recently mandated the declaration of cryptocurrencies that haven't been previously disclosed, spanning back several years, ranging from four to twenty years.
