African tax authorities are increasingly focusing on cryptocurrency users as part of a larger strategy to catch tax evaders. These individuals often rely on the borderless nature of digital assets, which frequently operate without regulatory oversight.
As cryptocurrency ownership and transactions grow across the continent, tax agencies see the sector as a promising source of additional revenue. In particular, the Kenya Revenue Authority (KRA) is ramping up its efforts to target digital asset users in a bid to capture taxes that have so far gone uncollected.
Kenyan Authorities Eye Digital Assets for Revenue Growth
With ongoing concerns about missed revenue targets, the KRA has begun exploring how to capture taxes from cryptocurrency trades, many of which remain outside the traditional tax bracket due to anonymity and a lack of regulatory frameworks.
Though the sector remains unregulated by reporting authorities, i.e. CBK (Central Bank of Kenya) and CMA (Capital Markets Authority), the earnings from the sector are legally taxable as per Section 3 of the Income Tax Act.
the KRA stated earlier this week.
The KRA estimates that Kenyans transacted roughly KSh 2.4 trillion between 2021 and 2022—about 20% of the country’s Gross Domestic Product (GDP)—none of which was taxed. Moreover, cryptocurrency ownership has skyrocketed in the country, growing by over 187% since 2021, according to data from Statista. As of 2024, an estimated 729,200 Kenyans own cryptocurrency, compared to just 253,000 in 2021.
The KRA is now eyeing this rapid growth in crypto transactions as a way to plug revenue gaps after two consecutive years of missed financial targets.
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South Africa’s Crypto Crackdown
Kenya isn’t the only African nation intensifying its focus on crypto taxation. Last week, the South Africa Revenue Service (SARS) issued a stern warning to cryptocurrency holders, urging them to declare their digital assets in their tax returns. SARS Commissioner Edward Kieswetter revealed that the agency has upgraded its technology and will soon be able to track down crypto users who fail to comply.
Despite estimates suggesting that at least 5.8 million South Africans own cryptocurrency, only a fraction of these individuals declare it in their tax filings. Kieswetter made it clear that non-compliance is no longer an option, as SARS now has the tools to identify and pursue those evading taxes.
Let all know that technology has enhanced SARS’ ability to root out non-compliant taxpayers, and the SARS will pursue all without fear, favour or prejudice
said Kieswetter
Broader Implications for African Taxpayers
Both Kenya and South Africa are looking to expand their tax brackets through increased oversight of digital assets. Authorities argue that by catching tax evaders, they can relieve the burden on compliant taxpayers and ensure that public resources are distributed more equitably.
“Those who are evading their responsibility make the burden of compliance difficult for other taxpayers,” added Kieswetter. “This is not only unfair to honest taxpayers but also affects the vulnerable in society disproportionately by limiting the state’s ability to deliver social grants and other much-needed social benefits.”
The move signals a growing awareness among African tax authorities of the potential revenue locked within the burgeoning cryptocurrency market. As more individuals and businesses adopt digital currencies, tax agencies are under pressure to find effective ways to regulate and capture taxes from these transactions.
As Kenya and South Africa enhance their technological capabilities to track crypto users, tax evaders relying on the anonymity of digital assets will likely find it increasingly difficult to escape scrutiny. These efforts underscore the broader push by African tax authorities to ensure that all taxpayers, including those in the digital space, contribute fairly to national revenues.
