Kenya’s Ministry of Finance has announced that it will begin taxing income generated from cryptocurrency exchanges used by an estimated 4 million local residents.
According to reports, Kenyan authorities will impose a 1.5% digital services tax, which will come into effect on January 1, 2021.
First proposed in 2020, the Digital Services Tax is an attempt by the Kenyan government to generate revenue from leading cryptocurrency exchanges and tax-evading digital asset platforms.
In early January 2021, the Kenya Revenue Authority (KRA) said it expected to collect US$45.5 million (KES 5 billion) from taxes.
Njuguna Ndung’u, Cabinet Secretary at the Ministry of Finance, also revealed the 2023 Value Added Tax (VAT) Regulations (Electronic, Internet and Digital Market Supply), which will allow Kenya to target global cryptocurrency exchanges.
Ndung’u said the move was necessary to ensure that all businesses, including those operating in the digital space, contribute to the country’s tax base.