Bitcoin Helps Kenya as Tax Regulators Crack Down on Small Business

Tax authorities in Kenya have fixed eyes on the country’s thousands of kiosks in its latest round of anti-tax evasion measures. The public reaction so far, however, has been strong.

Also read: Kenya Bank Stops M-Pesa Loans Following Legislation Update

Kenya Targets ‘Informal Sector’

Kenya has a high proportion of unbanked citizens, but also mobile micropayment transactions among the world’s highest. The country also grapples lingering corruption, higher up in business.

Small-scale operations such as kiosks, ubiquitous throughout Kenyan towns and cities, make up the overwhelming majority of its workforce. Some 80% of employment is in the “informal sector,” local publication Standard Digital notes.

The paper quoted National Treasury Cabinet Secretary Henry Rotich as saying: “As part of the review of income tax, we are considering the introduction of a presumptive tax for the hard-to-tax segment of the population, including those in the informal sector.”

The new rules will reportedly even extend to matutu drivers, who form the mainstay of urban transport. The announcement immediately met with questions from the public. They demanded to know how the government would enforce the legislation in a country with low banking penetration.

Kiosk owners to start paying taxes. Whilst the poor man struggles, the thugs in leadership keep stealing #SokoNews pic.twitter.com/0a8i42dqZa — SokoAnalyst (@SokoAnalyst) October 6, 2016

Rotich meanwhile focused on the need to apply tax laws uniformly, regardless of status.

“We must widen the tax net so that everyone eligible to pay tax, including those in the informal sector, does so,” he said. “In this respect, I have asked the [Kenyan Revenue Authority] to explore ways of taxing the informal sector and to redouble their efforts to net tax evaders.”

BitPesa: Customers ‘Have Nothing to Worry About’

The move comes amid a setback for the country’s microloans customers. In August, the country enacted new banking legislation which prevented Kenya’s largest mobile payment operator M-Pesa from providing loans. A spokesman at the time said the program “had been put on hold for the time being,” with functionality only remaining for repaying existing loans.

Bitcoin-based operator BitPesa meanwhile confirmed to Bitcoin.com that the tax crackdown would not affect watertight customers.

“Customers have nothing to worry about as long as they’re paying their taxes,” the company said. “All BitPesa transactions start or end in a bank or mobile money account, which are monitored.”

The government has not yet responded to queries regarding how systematic the new checks will be. It did not single out mobile money wallet monitoring as needing improvement. Yet the manpower and resources required for any increase will itself likely be an issue going forward.

What are your reactions to the Kenyan government’s decision? Let us know in the comments section below!

Images courtesy of Shutterstock.

If you would like more information on how governments tax citizens and the implications for users of Bitcoin and virtual currencies, head over to our user guides section or post your questions for the community on the Bitcoin.com Forum.