According to local media reports, the Kenya Revenue Agency (KRA) made it clear that its planned digital service tax (DST) will be applied to cryptocurrencies at a rate of 1.5% of the total transaction value.

In August, the agency announced new rules for levying taxes on its so-called “digital markets.”

However, due to slanted definitions of these key terms, it is not clear who exactly will be taxed under the new regulations that came into effect on January 1, 2020.

Now, KRA tax expert Nixon Omondi (Nixon Omondi) seems to have broken the record.

“According to the law, anyone who will provide digital services-encryption is digital, the platform is digital, the acquisition process is digital, and the payment process is digital-in this regard, DST will apply to cryptocurrencies.” He said in Bitcoinke Explained in the report.

The clarification means that platforms that handle virtual currencies will need to pay a 1.5% tax to the Kenyan government. For foreign peer exchanges such as Paxful and Binance P2P, which operate in East African countries, the situation is quite tricky-they will have to deduct taxes every month.

Kenya’s cryptocurrency business will also make similar payments. The report said, however, local companies “can choose to refund their digital service tax at the end of the year because they also need to pay other taxes and fees within Kenya’s jurisdiction.”

The Kenya Revenue Agency stated in its initial communication that the digital service tax should be “paid by those who generate or generate income from the service through the digital market”. However, the term “digital market” was legally and technically ambiguous, which caused great panic.

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Kenya’s Financial Law provides a fairly broad definition of the term, describing the digital market as “a platform for direct interaction between buyers and sellers of goods and services through electronic means.” Kenya is second only to Africa. The third largest Bitcoin market in Nigeria and South Africa.

What do you think of Kenya’s digital service tax? Let us know in the comments section below.

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