The digital cash crunch in Kenya has reportedly impacted its tax authority to consent to impose a tax on the digital economy and other digital-related profit makers. The local tax authority reported that the tax collection protocol is likely to commence by July and taxes will vary, ranging from a 5% minimal tax to a 15% maximum impose tax on digital assets.
The Kenyan government is keen on minimizing fiscal deficit in the economy revenue inflow and maximizing domestic revenue growth via tax collection from the digital market where content creators, cryptocurrency transactions or exchanges, and other related digital assets are targeted for tax.
Imposed tax on digital assets is one way to regulate the crypto market from an angle, while the other significant angle to regulate the crypto market is yet to be discovered. However, the insatiable Kenyan regulatory system happened to have impacted the East African region to bid for enormous domestic revenue growth.
The moment the Kenyan tax authority reports to impose the tax collection bill on digital assets, the entire region will follow the tax trends in billing the tech-savviest population a portion of their earnings. Due to the income/cash crunch in its digital economy, the tax regulatory system tends to set up a policy, bidding to revive the domestic economy’s GDP growth.
For context, the Kenyan tax authority’s intended rate for collection is based on a withheld income tax policy that demands 15% from content creators that are intended to pay an actual 5%, digital assets exchange will also pay 5% tax and taxes on other valuable digital assets.
According to the Kenyan tax authority, “anything of value that is not tangible and cryptocurrencies, token code, the number held in digital form and generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration that can be transferred, stored or exchanged electronically; and a non-fungible token (NFTs) or any other token of similar nature, by whatever name called.”
Kenyan tech-savviest population has reportedly experienced the impact cash crunch in the digital economy which has attracted its government’s consent to draft tax policy for exchanging and transferring digital assets. Once the inland tax authority plays its cards right with an approved financial bill, the imposed tax on digital assets will be effective from July.
However, the tax policy is focused on the earnings made by content creators cashing out as users of digital exchange platforms such as Yellow Card, Luno, Binance, and other crypto platforms are obliged to the deductible tax policy on every transaction on the mandated platforms. This includes the in-app transaction fee charged for every virtual receipt, while the tax authority will be credited by digital platforms with deducted tax within 24 hours.
The tax authority is another faction of the Kenyan regulatory system that is set to regulate the digital economy with a portion of receivable tokens from digital assets. This denotes that the domestic apex bank will be summoned whenever a digital platform is caught operating in Kenya without a license – yet an unforgivable tax policy added to the policy defaulter’s bill.