Kenya Considers 3% Tax on Crypto (Report)

Kenya Considers 3% Tax on Crypto (Report)

The Kenyan government plans to impose a 3% tax on cryptocurrency transfers to reduce the country's budget deficit and increase its domestic revenue.

Kenya is among the leading countries on the African continent when it comes to crypto adoption. Patrick Njoroge – governor of the central bank – has previously suggested that Bitcoin could solve the nation's problems with its depreciating official currency.

Crypto included in new bill

Asreportedfrom Bloomberg, Kenya's lawmakers could introduce a 3% tax on the transfer or exchange of cryptocurrencies, while a 15% levy could affect creators of monetized online content.

The proposal is part of a revamped bill that could stabilize the African nation's financial situation. President William Ruto aims to double tax revenue to 5 trillion shillings (about $37 billion) in five years and use the funds to promote monetary growth.

The legislation will become official from early July if Kenyan lawmakers approve it. The country estimates revenue in the first 365 days at about $21 billion (14% more than expected revenue for the current fiscal year).

Kenya is considered a lower-middle income economy, with over 16% of its population living below the international poverty line. Economic inequality, health problems and government corruption are the main factors behind the negative trend. Despite its problems, it remains one of the most developed districts in East and Central Africa.

Kenya: the African crypto leader

In contrast to the country's financial difficulties, a significant number of Kenyans have turned their attention to the cryptocurrency industry in recent years.

United Nations (UN) investigations in summer 2022appreciatedthat 8.5% of the population (more than 4 million people) were HODLers: the highest adoption rate in Africa. South Africans (7.1%) and Nigerians (6.3%) rounded out the top three list.

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

"The returns from trading and holding cryptocurrencies, as with other speculative businesses, are highly individual. Overall, they are overshadowed by the risks and costs they pose in developing countries. The sector is unregulated domestically and remains largely unregulated even in developed countries."

It is worth noting that Kenya's central bank has a somewhat positive stance towards Bitcoin (unlike many other centralized financial institutions around the world). Governor Njorogerecommendedin 2021 that the launch of the primary cryptocurrency could ease the financial turmoil that hit the region shortly after the COVID-19 pandemic.

"Our decision to switch to Bitcoin is both tactical and logical. Our currency has always been the punching bag for the IMF, which always claims that the Kenyan shilling is overvalued. This has led to too much pressure on the Kenyan shilling, which has a negative impact on the economy," he said.

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