Kenya’s New Bill: Taxing Crypto and NFT Transactions.

Kenya legislators are considering drafting a new bill that will tax crypto and non-fungible token (NFT) transfers and commercial online content.

Kenya Financial Bill on Crypto and NFT :

The Kenyan parliament was presented with the Finance Bill 2023 on May 4, proposing implementing a digital asset tax on “income obtained from the exchange or transfer of digital assets,” with a specific provision for non-fungible tokens (NFTs).
If the bill is passed, it will require anyone initiating transfers of digital assets such as cryptocurrencies, NFTs, and cryptocurrency exchanges to collect and return a 3% tax to the Kenyan government. Furthermore, any business not registered in Kenya must register under the new tax system.

The proposed plan would also collect a 15% tax on money made by content creators that advertise or promote goods and services online through advertising, affiliate marketing, retail sales, and paid memberships, among other methods. If adopted, the law will go through five rounds of readings, committee assessments, and National Assembly reports before being given to the president for ultimate approval.

Kenyans have had mixed reactions to the proposed tax on digital assets:

The proposed levy on digital assets has provoked conflicting responses online. Some Kenyans are pleased that digital assets, such as cryptocurrency and NFTs, are now formally recognized in the country. However, the Central Bank of Kenya has previously warned against utilizing cryptocurrency without a comprehensive ban.

Cryptocurrency Kenya, a crypto advocacy group in Kenya, commended the bill but stated that the digital tax should apply to all digital transactions rather than only crypto and NFTs. The group also noted that a crypto-only tax is “targeted harassment” and pointed out that the proposed tax is more than the fees levied by exchanges such as Binance, which charges a 0.10% trading fee.

Kenya elected William Ruto president in 2022, even though regulators had not introduced any crypto legislation. Ruto was seen as more pro-crypto than his opponent, Raila Odinga.

Later in 2022, lawmakers moved to control cryptocurrency by amending capital market regulations to require crypto-related actions to be reported to authorities. The latest measure imposing a tax on digital assets may be viewed as a first step toward regulating Kenya’s crypto industry, while it was only sometimes legitimate.

Other countries have recently implemented similar policies. For example, according to UN research, Kenya has a relatively high crypto adoption rate, with around 8.5% of the population, or 4.25 million people, owning cryptocurrency.