This is the first tax cycle for crypto firms in Kenya under the Finance Act of 2023.
Kenya to use AI, ML to identify tax evaders from the Web3 space
Photo Credit: Pixabay/ Sergei Tokmakov
The financial authorities of Kenya managed to collect KES 10 billion (roughly $77.3 million or Rs. 653 crore) from VASPs in FY 2023-24. The announcement was made by KRA board chairman Anthony Mwaura this week during the Taxpayers' Day celebration. By requiring official registration of crypto firms, Kenya has effectively tracked businesses involved in digital asset trading, enabling the country to collect the reported crypto-related tax revenues.
Between 2023 and 2024, the Kenya Revenue Authority was able to collect taxes from a total of 384 digital asset dealers, local publication The Standard reported recently.
In the next five years, the KRA is aiming at collect KES 60 billion (roughly $464 million) from players operating in Kenya's Web3 ecosystem.
This is the first tax cycle for crypto firms in Kenya after the country enforced Finance Act of 2023, which introduced a three percent tax on the transfer or exchange of digital assets. This rule is called the Digital Assets Tax (DAT) and applies to traders as well as the exchanges facilitating the trading of digital assets.
To ensure that Web3 firms are in accordance with the tax laws, the Kenyan authorities have decided to use technologies like Artificial Intelligence (AI) and Machine Learning (ML) to detect any attempt of tax evasion.
As per a 2022 UN report Kenya has the largest share of crypto users in Africa. The country, as per UN, had over four million crypto owners in 2022.
Statista estimates that Kenya's Crypto sector will at least see a four percent growth between 2024 and 2025. As Kenya's crypto sector expands, authorities are taking proactive measures to protect citizens from financially risky projects.
Last year, Kenya became the first country to subject the World initiative, founded by OpenAI's Sam Altman, to an investigative probe. The World project, which aims to provide blockchain-based universal proof-of-personhood through 'World IDs' and iris scans, has been under scrutiny. Earlier this year, Kenya directed the project to officially register in the country.
While steps are being taken, Kenya has yet to establish a comprehensive regulatory framework for the crypto sector.
Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.