Crypto Sector in Kenya Withholds Billions in Taxes

Crypto Sector in Kenya Withholds Billions in Taxes

Dealers in the cryptocurrency sector have blamed their refusal to remit billions of shillings in taxes on a Central Bank of Kenya (CBK) circular that forbade them from transacting with the industry.

Following the introduction of a 3% tax by the Finance Act of 2023 on the earnings of crypto traders, the Block Chain Association of Kenya has been collecting taxes from more than four million Kenyans but has not been remitting them to the Kenya Revenue Authority (KRA).

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The sector revealed to the National Assembly’s Finance Committee that their inability to do so is a result of a Central Bank of Kenya (CBK) circular forbidding banks from dealing with the industry.

Back in December 2015, the financial institution cautioned Kenyans on the possession and trading of virtual currencies such as Bitcoin in Kenya. It argued that it is not a legal tender.

CBK stated that Bitcoin is a form of unchecked digital currency that is not circulated or backed by any government or central bank.

According to Alan Kakai, the director for legal and policy affairs, the Block Chain Association of Kenya (BAK), the association has withheld the 3% tax since the digital asset tax (DAT) was introduced on September 1, 2023 but has been unable to remit the tax to the Kenya Revenue Authority (KRA) due to the CBK barring them from operating bank accounts.

He however refused to reveal the amount that the industry has amassed so far.

He concluded that the industry wishes to be regulated, taxed, and given a license to operate.

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