Kenya to Upgrade Tax System for Real-Time Crypto Monitoring

The Kenya Revenue Authority (KRA) is set to upgrade its outdated tax collection system to improve efficiency and transparency.

The new platform will employ advanced technologies to monitor cryptocurrency transactions in real time, which aims to reduce tax evasion.

Recent reports indicate that KRA plans to implement this system as part of its tax strategy for the 2024/2025 fiscal year. It will integrate with cryptocurrency exchanges and marketplaces to gather comprehensive transaction data, such as dates, times, and values. This initiative seeks to broaden the tax base and address revenue losses linked to the lack of oversight on digital assets.

In addition to tracking transactions, KRA intends to use artificial intelligence and machine learning to identify tax evasion more effectively. By referencing Kenya’s Income Tax Act, the authority emphasizes its commitment to collecting taxes on digital assets.

With an estimated four million crypto users in Kenya and transactions valued at approximately $18.6 billion in 2022, the country recognizes the need for a robust regulatory framework. Although the crypto landscape has been largely unregulated, recent changes in tax laws are intended to clarify obligations for local investors. Currently, exchanges must withhold 3% of transactions for the government, reinforcing the requirement for taxpayers to report earnings from digital assets.

KRA’s Digital Economy Tax office manager, Nickson Omondi, noted that improved communication among regulatory bodies regarding digital asset governance is a promising step for the industry, signaling a more organized approach to crypto regulation in Kenya.