In an effort to narrow the fiscal deficit and boost domestic revenues, Kenya’s government is planning to impose a 3% tax on cryptocurrency transfers. Kenya is a leader in crypto-adoption on the African continent, and Governor of the Central Bank, Patrick Njoroge, has suggested bitcoin could help solve the country’s problems with its depreciating official currency.
Crypto Included in the New Bill
According to Bloomberg, the new bill might include a 3% tax on cryptocurrency transfer or exchange, with a possible 15% levy affecting creators of monetized online content as well. The bill aims to stabilize the financial condition of Kenya and double tax collections to 5 trillion shillings (around $37 billion) in five years to promote monetary growth. The proposal will become official from the beginning of July if approved by Kenyan lawmakers. The country anticipates revenue of approximately $21 billion during the first 365 days of its implementation, a 14% increase from the current fiscal year’s anticipated collections.
Despite being a lower-middle-income economy, Kenya is one of the most developed countries in eastern and central Africa. However, economic inequality, health problems, and corruption in the government hinder the country’s growth, with over 16% of its population living below the international poverty line.
Kenya: the African Crypto Leader
Despite these challenges, a significant number of Kenyans have turned their focus toward the cryptocurrency industry in recent years. The United Nations estimates that 8.5% of the population (more than 4 million individuals) were HODLers in 2022, the highest adoption rate in Africa. South Africans (7.1%) and Nigerians (6.3%) rounded up the top 3. However, the UN was unable to determine the approximate value of digital assets held by Kenyans due to the lack of comprehensive regulations in the industry. Kenya’s central bank has a positive stance on bitcoin, with Governor Njoroge suggesting that adopting the primary cryptocurrency could ease the financial turmoil that hit the region shortly after the COVID-19 pandemic.