Foreign Crypto Exchanges Like Paxful, Binance to Pay 1.5% Tax Under Kenya's New Regulations – Taxes Bitcoin News


Foreign Crypto Exchanges Like Paxful, Binance to Pay 1.5% Tax Under Kenya's New Regulations

The Kenya Revenue Authority (KRA) has clarified that its planned digital service tax (DST) will be applicable to cryptocurrencies at a rate of 1.5% on gross transaction value, local media reported.

In August, the agency announced new rules for the taxation of what it calls “digital marketplaces.”

However, with oblique definitions on such key terms, it has not been clear who exactly will be taxed under the new regulations that come into force on Jan 1, 2020.

Now, KRA tax expert Nixon Omondi has appeared to set the record straight.

“As the law is, any person who will be offering a digital service – crypto is digital, the platform is digital, the acquisition process is digital, the process of payment is digital – in that respect, DST will be applicable on cryptocurrencies,” he explained, in a report by Bitcoinke.

The clarification means that platforms dealing with virtual currencies will be required to pay the 1.5% tax to the Kenyan government. The situation is rather tricky for foreign peer-to-peer exchanges like Paxful and Binance P2P, which have operations in the East African country – they will have to remit the tax each month.

Kenyan crypto businesses will make similar payments, too. However, local firms “have the option of claiming back their digital service tax at the end of the year since they also pay other taxes within the Kenyan jurisdiction,” said the report.

In its original communication, the Kenya Revenue Authority stated that the digital service tax is to be paid “by a person who derives or accrues income from services through a digital marketplace.” But the term “digital marketplace” proved a source of much consternation because of it being legally and technically ambiguous.

Kenya’s Finance Act offered a rather broad definition of the phrase, describing digital marketplaces “as a platform that enables the direct interaction between buyers and sellers of goods and services through electronic means.” Kenya is Africa’s third-biggest bitcoin market after Nigeria and South Africa.

Tags in this story
Africa, Binance, crypto taxation, Digital markeplace, Kenya Revenue Authority, Kenya's digital service tax, Nigeria, Nixon Omondi, Paxful

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

Jeffrey Gogo

Jeffrey Gogo is an award winning financial journalist based in Harare, Zimbabwe. A former deputy business editor with the Zimbabwe Herald, the country's biggest daily, Gogo has more than 17 years of wide-ranging experience covering Zimbabwe's financial markets, economy and company news. He first encountered bitcoin in 2014, and began covering cryptocurrency markets in 2017

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