Kenya plans real-time crypto tax system with AI integration

Kenya is set to introduce a major overhaul to its cryptocurrency landscape by implementing a real-time tax system aimed at monitoring and taxing cryptocurrency transactions through integrated exchanges. 

The Kenyan Revenue Authority (KRA) is leading this initiative to capture crucial data such as the time and value of each trade, ensuring that the country can effectively collect taxes on cryptocurrency activities.

The current system is unable to adequately track crypto transactions, resulting in significant revenue losses. 

As per Section 3 of Kenya’s Income Tax Act, all income generated from crypto is taxable, prompting the need for a more robust system. 

“The goal is a robust and efficient system for effective and efficient collection of taxes on cryptocurrency,” said a Kenyan revenue collector.

According to a report by Techpoint Africa, this move aligns with Kenya’s growing role as a crypto hub in Africa. 

The country already ranks high in cryptocurrency usage, with citizens using digital assets for trading, hedging against inflation, and protecting against currency depreciation.

Kenya’s initiative extends beyond real-time taxation, as the KRA is also exploring the use of artificial intelligence (AI) and machine learning to combat tax evasion. 

These technologies are expected to streamline revenue collection and enhance transparency within the system.

Additionally, the Kenyan government is proposing to use mobile payment services like M-Pesa for tax collection starting December 25, 2024. 

While these measures aim to improve the government’s financial position, they have faced resistance, particularly from younger Kenyans who have protested against the proposed tax hikes and reforms.