Kenya is the most recent nation to declare its intention to regulate the cryptocurrency industry by taxing digital currency transactions as the industry expands.
Business Daily Africa stated on November 21 that if parliament adopts The Capital Markets (Amendment) Bill, the government would implement an income tax structure for cryptocurrency dealers.
“If digital money is kept for a time not exceeding twelve months, income tax regulations shall apply, and where digital currency is retained for a period beyond twelve months, capital gains tax laws shall apply,” the measure states.
The proposed legislation also seeks to apply capital gains taxes on the higher market value of cryptocurrencies when sold or utilized in a transaction.
As the nation is home to at least four million cryptocurrency investors, the government intends to impose a 20% excise tax on all digital asset transaction commissions and fees.
Interestingly, crypto holders are required to provide the Capital Markets Authority (CMA) with tax-related information. Included in the information to be disclosed are the dates of purchase and sale of the cryptocurrency.
The bill reads, “A person who trades in digital currencies must preserve records of digital currency transactions, including purchases and sales, and pay taxes on any profits generated from digital currency transactions in line with the relevant laws.”
If the measure is enacted, it would be the first time the government has explicitly regulated cryptocurrency, signalling the mainstreaming of the industry.