After the controversial demise of the FTX exchange, most of the cryptocurrency proponents are concerned that it will grant an opening for the regulators to interfere.
To this end, Kenya has become the latest government to issue the intention of imposing regulations on the cryptocurrency sector. In this regard, the parliament of Kenya has recently approved Capital Markets Bill.
The bill is an amendment to the existing income tax legislative structure in the African nation to make inclusion for cryptocurrencies.
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The latest report published in Business Daily Africa informs that when the cryptocurrency reserves are under the ownership of an investor for a defined period, they could be subjected to income tax deductions.
Proposed Crypto Tax Bill
The government of Kenya has already passed a bill to impose income tax on the cryptocurrencies that investors are holding for more than one year. Furthermore, the bill has also clarified that the laws relating to the capital gains taxes would apply to the cryptocurrency reserves at the same time.
Furthermore, the capital gains tax deductions on the cryptocurrencies would also apply in lieu of market value increase when positions are dissolved.
Another important taxation on the cryptocurrency investors hailing from Kenya is in the form of a 20% excise duty which is going to apply to all the commission and digital asset gas fee transactions.
Kenyan Citizens who have cryptocurrency reserves must also report their portfolio to the financial authority, i.e., Capital Market Authority (CMA).
The reporting is required by the law to ensure the correct taxation evaluation. The investors must report all the details, such as the date of acquisition and the details of tradeoffs.
It is important to note that in the past, the Central Bank of Kenya (CBK) issued a warning for investors to refrain from investing in high-risk currencies such as Bitcoin.
However, the warning by the CBK arrived when around four million cryptocurrency investors suffered losses during the bear market.
CBK governor Patrick Njoroge has told the media that he was under pressure from the crypto evangelist to convert the national reserves of Kenya into Bitcoin.
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