Tax on trading in your country
What you learn in 3 minutesThis lesson shows which authority in Kenya wants to hear about your trading results, how those results are treated for tax, and what records to keep from the first day. A reader who keeps clean records can answer a question about a KSh 30,000 gain in minutes; one who does not may spend weeks rebuilding statements.
One year, two traders, KSh 30,000 of gains
| Step | Amount | Note |
|---|---|---|
| Trades closed in the year | 40 | counted from the broker statement |
| Total gains | KSh 48,000 | sum of the winning trades |
| Total losses | KSh 18,000 | sum of the losing trades |
| Net result | KSh 30,000 | 48,000 minus 18,000 |
| Records kept | 40 entries | one line per closed trade, with date, pair, size and result |
Your broker may report a different net figure because of spreads, commissions, swap or financing charges, and currency conversion. The tax treatment of gains and losses also varies, so check what applies to you.
The mistake people make here
The common mistake is to trade for months without downloading statements, then try to reconstruct the year from memory. People also assume that because the money arrived by M-Pesa or bank transfer, no record is needed. Instead, save the monthly statement as a file on the day it arrives, and keep a simple sheet with one row per closed trade. If you cannot explain where a KSh 5,000 gain came from, you cannot report it correctly.Check yourself
You close 12 trades. Gains total KSh 24,000 and losses total KSh 9,000. What is the net result, and how many rows should your record have?
Net result is KSh 15,000 (24,000 minus 9,000). The record should have 12 rows, one for each closed trade.
One pip on one standard lot of EUR/USD is 10 units of the quote currency. At about 1.0850, and with the shilling rate given by your broker, why can the shilling value of that pip differ between brokers?
Because the conversion rate from the quote currency to KES varies by broker and by the time of conversion, and brokers may add their own charges. The pip size is fixed at 10 units of the quote currency, but the KSh figure is not.
In Kenya
- Regulator for investment firms
- CMA
- Tax authority
- Kenya Revenue Authority
- Common funding methods
- M-Pesa and bank transfer
- Records to keep
- Broker statements, M-Pesa messages and bank entries for each deposit and withdrawal
- When to check the rules
- Before you file, because rates and treatment can change and vary by person