Kenya Projects $46 Million in Earning From New Tax Targeting Crypto Exchanges

The digital service tax (DST) was first proposed in August 2020 and came into force on Jan. 2 despite implementation concerns. On all crypto transactions, the tax is paid at a rate of 1.5 per cent on the gross transaction value.

The tax will also be charged to the Kenyan government by both local and foreign digital asset exchanges operating in the country. Foreign exchanges such as Paxful and Binance peer-to-peer platforms will be expected to pay the tax per month.

However, at the end of each year, Kenyan crypto companies have the option of demanding back their DST because they are still subject to paying other local taxes.

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According to Rispah Simiyu, commissioner of the Kenya Revenue Authority’s domestic tax department, the tax is an acceptable response to the growth of digital activity in the third largest crypto-economy of the continent, the East African region.

As per her recent op-ed article for Business Daily, a local newspaper, she estimated that the DST would gain the Kenyan government $45.5 million in revenue for the first six months of this year. Simiyu noted that the new tax represents a “remarkable step for Kenya,” adding that “The increasingly digital marketplace is a promising platform for revenue generation, and realignment of tax collection mechanisms is of urgent necessity. It provides an avenue for multinationals to contribute to the growth of the country where they derive their income. This will strengthen the moral business case for international commerce as practised in Kenya.”

Kenya is ranked as the third biggest bitcoin (BTC) market in Africa after Nigeria and South Africa. On the Paxful P2P exchange alone, Kenyans have traded $55.3 million worth of bitcoin, or 5,894.8 BTC, over the past five years. The country is Paxful’s eighth largest market in the world, only exceeded by Nigeria in Africa.

Kenya ranks as Africa’s third biggest bitcoin (BTC) market after Nigeria and South Africa. Kenyans have traded $55.3 million worth of Bitcoin, or 5,894.8 BTC, on the Paxful P2P exchange alone, over the past five years. The country is Paxful’s eighth biggest market in the world, surpassed only by Nigeria in Africa.