In the wake of a circular restricting banks’ dealings with the cryptocurrency industry, the crypto association has refused to remit billions in taxes to the Kenya Revenue Authority (KRA).
The Blockchain Association of Kenya has refused to pay the three per cent tax collected from more than four million Kenyans selling digital assets. They did so because the Central Bank of Kenya (CBK) circular restricted banks from providing services to virtual asset companies.
“We have withheld the tax since the digital asset tax (DAT) came into effect on September 1, 2023. The CBK told banks not to touch the Cryptocurrencies. The CBK blocked us from holding bank accounts,” says Alan Kakai, Director of Legal and Policy Affairs Blockchain Association of Kenya.
The Director, however, didn’t provide details on the amount of tax revenue withheld by the industry.
Mr Kakai stated, “KRA has imposed a three percent tax on the gross fair market value of the DAT that is to be remitted within five working days. But we have not remitted any money.”
In 2015, the CBK argued that cryptocurrencies are not legal tender and, therefore, warned Kenyans against transacting or investing with cryptocurrencies like Bitcoin. The warning came when the use of cryptocurrencies was on the rise in Kenya.
However, presently, as part of the Finance Act of 2023, which took effect on September 1, 2023, a three per cent tax has been made compulsory. The gains made from trading digital assets will be taxed.
Mr Kakai further expressed, “We want to be regulated and taxed. We want to be licensed to operate. The biggest challenge with crypto is to be understood.”