Kenya Mulls 3% Tax on Crypto (Report)

Kenya’s government plans to impose a 3% tax on cryptocurrency transfers to narrow the country’s fiscal deficit and boost its domestic revenue.

Kenya is among the leaders on the African continent in terms of cryptocurrency adoption. Central Bank Governor Patrick Njoroge previously suggested that Bitcoin could solve the country’s problems as its official currency depreciates.

Encryption is included in the new bill

like mentioned According to Bloomberg, lawmakers in Kenya may impose a 3% tax on cryptocurrency transfers or exchanges, while a 15% tax may affect creators of monetized online content.

The proposal is part of a newly designed bill that could stabilize the financial condition of the African country. President William Ruto aims to double tax collection to Sh5 trillion (about $37 billion) within five years and use the money to boost monetary growth.

The legislation will become official from the beginning of July if Kenyan lawmakers give their approval. The state estimates revenues to be around $21 billion during the first 365 days (14% more than projected collections for the current fiscal year).

Kenya is classified as a low-income economy, with more than 16% of its population living below the international poverty line. Economic inequality, health issues, and government corruption are the main drivers of the negative trend. Despite its problems, it is still one of the most developed provinces in East and Central Africa.

Kenya: African crypto leader

In contrast to the financial difficulties in the country, a large number of Kenyans have shifted their focus towards the cryptocurrency industry in the past few years.

Research conducted by the United Nations in the summer of 2022 estimated That 8.5% of the population (over 4 million individuals) were HODLers: the highest adoption rate in Africa. South Africans (7.1%) and Nigerians (6.3%) rounded out the top three.

However, the UN has been unable to determine an approximate value of the digital assets held by Kenyans due to the lack of comprehensive regulations in the industry:

“Returns from trading and holding cryptocurrencies, as with other speculative deals, are very individual. In general, the risks and costs that they pose in developing countries are overshadowed by them. The sector is unregulated in the country and remains largely unregulated even in the world.” advanced”.

It should be noted that the Central Bank of Kenya has a rather positive attitude towards bitcoin (unlike many other centralized financial institutions around the world). Governor Njoroge Proposal In 2021, adoption of the underlying cryptocurrency could ease the financial turmoil that hit the region shortly after the COVID-19 pandemic.

“Our decision to switch to Bitcoin is tactical and logical. Our currency has always been the punching bag of the International Monetary Fund, which always claims that the Kenyan shilling is overvalued. This has put severe pressure on the Kenyan shilling, and this has a negative impact on the economy.