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Under a recently introduced bill, Kenyan lawmakers are considering imposing a 3% tax on cryptocurrency and non-fungible token (NFT) transfers and a 15% tax on monetized online content.
The 2023 Finance Bill, introduced in the Kenyan Parliament on May 4, would introduce a digital asset tax on “income derived from the transfer or exchange of digital assets,” which also includes specific language for NFTs.
The bill will go through five rounds of readings, committees, and reports of the National Assembly, and if passed, it will be submitted to the president for final approval as law.
Cryptocurrency exchanges or those who initiate cryptocurrency or NFT transfers will be required to collect tax by deducting 3% of the value of the transfers, which must be paid to the government. Exchanges not registered in Kenya will be required to register under the tax regime.
Kenya will now tax
– crypto
– monetised online content pic.twitter.com/1mlJ5dXt83— Mpumelelo Ndiweni (@mpumiglobal) May 4, 2023
The bill also seeks to introduce a “digital content monetization” tax, levying a 15% tax on content creators who are paid to promote and advertise products and services online, including but not limited to sponsorship, affiliate marketing, merchandise sales, and paid subscriptions.
The Digital Assets section of the bill has received mixed reactions online.
Some were pleased to see that cryptocurrencies and NFTs are now officially recognized in the country. Previously, the Central Bank of Kenya warned against the use of cryptocurrencies, but no direct bans were introduced.
Rufas Kamau, a Kenyan researcher and market analyst, tweeted on May 4 calling the 3% tax a “joke” and sarcastically asked if it applies to “supermarkets and credit card loyalty points.”
The tax rate is 3% on every transaction. What a joke!
— Rufas Kamau ⚡ (@RufasKe) May 4, 2023
Kenya’s cryptocurrency advocacy group, Cryptocurrency Kenya, tweeted that such a digital tax “should apply […] everything digital,” arguing that taxing only cryptocurrencies is “targeted persecution.”
He also pointed out that the tax was higher compared to the fees charged by exchanges, comparing the government’s proposed 3% tax to Binance’s 0.10% trading fee.
“For the TRANSFER or EXCHANGE value”
Binance charges a 0.10% fee for trading on the platform as well as a 0.50% fee for Instant Buy/Sell
The government is looking to get 3% …
Well…#CryptocurrencyKE #SpaceYaCrypto #Bitcoin https://t.co/COr6cfxZy3
— CRYPTOCURRENCY KENYA (@CryptoHubKE) May 4, 2023
Related: Web3 Economy to Gain More Momentum in Africa with DeFi-Based Financial Integration
Kenya first attempted to regulate cryptocurrencies in November by amending its capital market laws to require those who own or deal in cryptocurrencies to report their activities to the authorities.
Kenya is in the top 20 countries when it comes to cryptocurrency adoption. In a September report by analytics firm Chainalysis, the country was ranked 19th in terms of cryptocurrency adoption.
