Kenya targets crypto transactions with new real-time tax system

The Kenya Revenue Authority (KRA) is moving forward with plans to implement a real-time tax system targeting cryptocurrency transactions. This system will integrate with cryptocurrency exchanges and marketplaces, enabling the KRA to monitor and record transaction details, such as the date, time, type, and value. 

The initiative is part of the KRA’s broader tax collection strategy for the fiscal year 2024/25. Citing Section 3 of Kenya’s Income Tax Act, the authority aims to tax earnings from crypto transactions, addressing past revenue losses due to outdated tracking systems. 

Kenya's crypto market, valued at $18.6 billion in 2022, presents significant untapped revenue potential. However, regulation in the crypto sector remains minimal, with the Capital Markets Authority (CMA) and Central Bank of Kenya (CBK) playing a limited role. Despite warnings from regulators, cryptocurrency continues to gain popularity, especially among the youth. 

The KRA also plans to use technologies like Artificial Intelligence (AI) and Machine Learning to enhance tax compliance and reduce evasion. With Kenya ranked among Africa's top crypto adopters, the KRA views this move as essential for expanding its tax base.