A senior official from the Kenya Revenue Agency (K Kenya) predicts that Kenya will receive up to 5 billion shillings (US$45.5 million) from new taxes on cryptocurrency exchanges and other online services in the first half of 2020.

The Digital Service Tax (DST) was first proposed in August 2020 and took effect on January 2 due to concerns about implementation. Each encrypted transaction is taxed at a tax rate of 1.5% of the total value of the transaction.

Local and foreign digital asset exchanges operating in the country will also pay taxes to the Kenyan government. Forex exchanges such as peer-to-peer platforms Paxful and Binance will have to pay taxes every month.

However, Kenyan cryptocurrency companies can choose to claim back DST at the end of each year because they already have to pay other local taxes.

Rispah Simiyu, Commissioner of the Internal Revenue Department of the Kenya Revenue Agency, said that this tax is an appropriate response to the growth of digital activity in East Africa, the third largest cryptocurrency economy on the continent.

She expects that according to her recent column in the local newspaper “Business Daily”, DST will earn the Kenyan government US$45.5 million in revenue in the first six months of this year. Simiyu noted that the new tax represents “a significant step for Kenya” and added:

[The increasingly digital marketplace] It is a promising income-generating platform, and there is an urgent need to adjust the tax collection and management mechanism. It provides multinational companies with a way to contribute to the growth of their source of income. This will strengthen the ethical business case for international trade practiced in Kenya.

Kenya is the third largest Bitcoin (BTC) market in Africa after Nigeria and South Africa. In the past five years, Kenyans have traded $55.3 million worth of Bitcoin or 5,894.8 BTC on the Paxful P2P exchange alone. The country is Paxful’s eighth largest market in the world, surpassed in Nigeria alone.

See also  China’s carbon neutral stance puts pressure on BTC miners and Sichuan Electric Power to increase it by 150% – Mining Bitcoin News

At the same time, Kenya has mixed and disparate attitudes towards the new taxation measures. Lawrence Mungai, a tax expert at PwC Kenya, Said The country intends to include “companies operating within the digital economy with little or no market jurisdiction under the tax net.”

However, he is not sure whether this goal can be achieved “according to different models adopted by stakeholders in the digital economy on a global scale”.Local TV station Reported Participants in the digital economy warned that “new taxes in emerging industries could hurt growth”. It said traders asked for more time to grow.

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

Picture Credits: Shutterstock, Pixabay, Wiki Commons