The financial situation in Kenya is slowly spiraling out of control. Small business owners are once again being targeted by the local Revenue Authority. Owners of a kiosk may find themselves forced to pay tax very soon, and door-to-door inspections to ensure tax compliance will be conducted. Another big boon for Bitcoin adoption, or a sign of more worrisome things to come?
Anyone who owns a kiosk in Kenya for their small business may find themselves n a bit of a pickle. The Kenya Revenue Authority will conduct thorough inspections to ensure tax compliance. What is rather surprising is the scope of these investigations, which will target even the smaller farmers.
To put this into perspective, the Kenya Revenue Authority wants these kiosk owners to pay taxes based on their turnover. In most countries, taxes are only paid on profits, which are what remains after deducting all other mandatory costs and expenses. For small business owners in Kenya, things will get very dire very soon.
Taxation In Kenya Is A Double-Edged Blade
By conducting in-person inspections of all physical locations and kiosks, the KRA shows they are not messing around. Rental properties, which eluded the taxman for several decades, will now also become subject to taxation. Property owners and traders will need to provide any information KRA staff may call upon. Even then, they may not be treated favorably.
Assuming someone would not be tax compliant, some action will be taken against them. Right now, it is unclear as to what this action would be. With the KRA falling behind revenue collection targets for many years, a new approach was required. Since most Kenyan businesses operate informally, there were very few options to tax owners properly.
National Treasury Cabinet Secretary Henry Rotich stated:
“We must widen the tax net so that everyone eligible to pay tax, including those in the informal sector, does so. In this respect, I have asked KRA to explore ways of taxing the informal sector and to redouble their efforts to net tax evaders.”
Depending on how this situation evolves, this could be positive news for Bitcoin adoption in Kenya. The country has been struggling finally for quite some time now. Business owners may look for alternative payment options to avoid being taxed on turnovers. Bitcoin would be a perfect solution, as it has already gained some traction in the country.
Source: Standard Media
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