In response to rising cryptocurrency usage, tax authorities in Kenya and South Africa are intensifying efforts to tax digital asset transactions. Kenya’s KRA plans a new digital tax system to track crypto trades, while SARS urges crypto holders to declare assets for tax purposes. This move seeks to address significant revenue losses and improve compliance, benefiting diligent taxpayers.
Tax authorities across Africa have intensified their scrutiny on cryptocurrency users as part of efforts to combat tax evasion associated with the rapidly growing digital asset landscape. The Kenya Revenue Authority (KRA) and the South African Revenue Service (SARS) are at the forefront of these initiatives, aiming to re-capture potential tax revenues lost due to the largely unregulated nature of cryptocurrency transactions. In Kenya, KRA has announced plans to implement a new digital tax system to monitor crypto transactions, which previously escaped taxation due to their inherent anonymity, despite earnings being legally taxable under the Income Tax Act. With estimates indicating a staggering 2.4 trillion Kenyan Shillings transacted from 2021 to 2022, it is clear that the Kenyan government stands to gain significantly by closing this tax loophole. In South Africa, SARS has similarly alerted cryptocurrency holders of the necessity to declare their assets in tax filings, citing enhanced technological capabilities to trace non-compliance. SARS commissioner Edward Kieswetter emphasized the disproportionate burden that tax evasion imposes on compliant taxpayers, reiterating the agency’s commitment to enforcing tax laws uniformly.
The African continent is witnessing a surge in cryptocurrency usage, with ownership and transactions rising sharply. However, this growth has occurred alongside a lag in regulatory frameworks that typically govern financial undertakings. Both Kenya and South Africa have acknowledged the potential for cryptocurrency as a significant source of tax revenue, particularly in light of deficits in their respective fiscal targets. As countries grapple with illicit financial flows and a desire to strengthen their economies, they are compelled to extend their tax nets to include the burgeoning digital asset sector. This strategic pivot reflects a broader global move towards increased regulation of cryptocurrency, aiming to ensure fiscal accountability and bolster public revenues.
The increased focus of tax authorities in Kenya and South Africa on cryptocurrency users marks a significant development in the regulation of digital assets within Africa. With the implementation of advanced technological solutions to monitor these transactions, both KRA and SARS are poised to enhance their revenue collection efforts and ensure compliance among cryptocurrency holders. As these nations navigate the complexities of a rapidly evolving financial landscape, the outcome of such regulatory initiatives will undoubtedly impact the future of cryptocurrency transactions and the broader economic environment.
Original Source: www.theeastafrican.co.ke
