Connect with us

Bitcoin

KRA Should Offer Guidance on Bitcoin Taxation in Kenya

Published

on

Bitcoin taxation in Kenya

Bitcoin has witnessed unprecedented growth over the year, yet central banks and policymakers are still grappling with how to classify cryptocurrencies in the current financial ecosystem. Kenya has a high number of bitcoin users despite the ‘regulatory grey area’ pertaining to cryptocurrencies.

\While the Central Bank of Kenya (CBK) has warned against the use of bitcoin in the past, lately the regulator seems to be taking a more positive approach. However, one area that remains unexplored is the tax consequences of bitcoin mining and speculation.

No Guidance on Bitcoin Taxation from the Kenya Revenue Authority

Bitcoin is known for its frequent and rapid price fluctuations with swings of five percent or more on some days. The volatility creates opportunities for investors to generate quick profits by bitcoin-fiat currency trades on the exchanges. Also, while exchanges stay within the same price range, lack of a definite bitcoin price creates arbitrage opportunities.

The Kenya Revenue Authority (KRA), however, has so far not provided any guidance on bitcoin taxation, which leaves cryptocurrency users in the dark as to how to adequately tax their digital currency income.

However, before investigating the tax implications, there is a need to ascertain whether bitcoin is classified as currency or commodity in Kenya.

Is Bitcoin a Commodity or Currency?

While bitcoin qualifies as a medium of exchange, it is hard to consider it as a store of value due to its volatility. Also, the digital currency can barely be a unit of account as the value must first be converted into fiat currency. Typically, money must have legal tender status and is issued in the form of coins and banknotes, with printing and supply being controlled by a central bank.

However, bitcoin is not recognised as a legal tender in Kenya and is also decentralised, which means it lacks a central governing authority. Therefore, it does not meet the criteria for money in both legal and economic sense. Hence, for the purposes of taxation bitcoin can be viewed as a commodity or an asset.

The question now arises as a commodity or asset when would bitcoin be taxable?

Cameron Keng, a contributor to Forbes Magazine, had this to say on the subject of bitcoin taxation:

“Bitcoin is taxable, whenever a taxable event occurs. A taxable event is whenever you cash out your bitcoin for any fiat currency (dollars, euros and etc.) or when you trade a bitcoin for anything (bartering). In taxation, bitcoin is best understood as an “asset.”  Whenever you hold an asset, it can increase or decrease in value. When you trade the bitcoin for fiat currency, then you’re trading an asset for dollars. It works the same way as when you trade gold bullion for dollars.”

How Should Bitcoin be Taxed

Bitcoin taxation should be very simple and come only in two forms: income tax and capital gains tax.

If an individual or a business receive payments in bitcoin for products sold or services rendered then normal income tax rules should apply.

If an individual buys bitcoin or engaging in active trading of cryptocurrencies to generate an investment income then that income needs to be taxed as capital gains.

As long as the Kenyan Revenue Authority (KRA) does not issue clear guidance on how to tax cryptocurrencies the country will miss out on valuable tax revenues. As bitcoin adoption grows and more and more Kenyans are pouring money into cryptocurrencies as investments, the more capital gains tax the KRA could collect. Also, the more freelancers and remote workers start to accept cryptocurrencies as payment, the more income tax revenue the KRA can generate provided it issues clear guidance on how digital currency should be taxed in Kenya.

Bitcoin

Binance Launches Fiat-to-Crypto Exchange in Uganda

Published

on

Binance Launches in Uganda

Global bitcoin exchange Binance has launched a new fiat-cryptocurrency exchange in Uganda. The exchange will also be offering a reward of 0.5 BNB to the first 20,000 users that register on the site as part of its promotion in Uganda.

The announcement comes nearly two months after Binance partnered with Crypto Savannah, Made in Africa initiative, and Msingi East Africa to promote economic development in the East African country.

Changpeng Zhao and Yi He founded Binance in 2017 and raised $15 million through an initial coin offering for its ERC20 token BNB in July of the same year.

The exchange plans to move its offices to the island nation of Malta after the implementation of stricter regulations in China and Japan. In January 2018, Binance was the largest crypto exchange with a market capitalisation of $1.3 billion.

Binance in Uganda

BinanceBinance will also offer its Ugandan users a month of zero trading fees when trading goes online. The exchange will announce the opening for trading at a later date.

Users can find out if they have won any rewards by logging into their accounts and accessing ‘Distribution History’ in the Account Center. In addition, users will be required to complete ID verification to be able to withdraw funds from Binance.

Ugandan users will enjoy an exchange that offers fast transactions of up to 1.4 million per second and state-of-the-art storage technology for utmost security. The exchange also provides 24/7 customer support and has a user-friendly interface.

The presence of Binance in Uganda aims to boost financial inclusion in the country, which has increased from 28 percent in 2009 to 54 percent in 2013 according to its national financial inclusion strategy 2017-2022.

Continue Reading

Bitcoin

LINE Corp to Launch Cryptocurrency Exchange BITBOX in July for Global Trading

Published

on

BitBox
Image by linecorp.com

The developers of popular messaging app LINE and LINE Group’s cryptocurrency and blockchain company LVC Corporation have announced that they are set to launch a new cryptocurrency exchange called BITBOX in July 2018. The Japan-based firm made the announcement during the LINE Conference 2018 held in Tokyo.

The New BITBOX Exchange

BITBOXBITBOX will offer over 30 high-demand cryptocurrencies to users globally with the exception of Japan and the US. The exchange will trade coins such as bitcoin, ether, litecoin, and bitcoin cash while charging low trading fees of 0.1 percent. BITBOX will support 15 languages, according to the company press release.

The selected cryptocurrencies for the exchange have undergone an extensive screening exercise and have been picked by an internal committee, promising users a convenient and safe trading experience. LINE will also incorporate its top security standards to the cryptocurrency exchange.

LINE Corporation CEO Takeshi Idezawa said:

“As a key part of LINE’s new financial services, BITBOX shows our commitment to fulfilling the growing demand for more diverse financial options. With BITBOX, LINE users will be able to access cryptocurrencies more easily, while also being assured of state-of-art security measures to protect their assets.”

Continue Reading

Bitcoin

Nigerians Have Invested Over $5m in Cryptocurrencies Despite Regulator Warnings Says KureCoin Hub

Published

on

Nigerians Invest in Cryptocurrencies

Nigerians have invested over five million US dollars in the cryptocurrency market in the last couple of years according to data from Nigerian cryptocurrency platform KureCoin Hub.

The data shows that Nigerian retail investors are investing heavily in the cryptocurrency market despite warnings from the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) against investing in an unregulated market.

KureCoin Hub’s co-founder and CEO Tega Abikure has criticised the stance regulators have taken and argues that the country will lag behind as other countries enjoy the benefits of blockchain technology and cryptocurrencies. Abikure told New Telegraph:

“It is not a matter of whether the government likes it; it is about whether they need it. I am not sure the internet was liked when it first came. […] It is not a matter of whether they are going to embrace it; it is about when they are going to do so.”

Abikure observed that other countries such as Uganda and South Africa have already taken steps towards adopting blockchain technology while Kenya is pushing forward with a functioning blockchain taskforce.

“Nigeria is being left behind,” he noted.

The Blockchain as a Source of Foreign Direct Investments

Abikure also believes that blockchain technology could be a major source of Foreign Direct Investments (FDIs) in the next five to ten years. In addition, he is of the opinion that a lot of money is being made in cryptocurrencies on the continent with most of it leaving Africa’s economy.

On one of the benefits of blockchain technology, he said: “[The blockchain] is completely transparent and cannot be changed; it can be used to create a decentralised system of payment where the taxpayer had an unhindered access to the collector which is the government. It enhances revenue collection and removes the challenges of remittances.”

Blockchain technology can also improve the banking sector, the electoral process, the use of donations in charitable projects, and the supply chain, among many other use cases.

Continue Reading

Popular Posts