Kenya’s Ministry of National Treasury & Economic Planning has proposed the inclusion of digital assets such as Bitcoin and NFTs in the country’s tax regime through the 2023 Finance Bill. This proposal comes despite the Central Bank of Kenya’s repeated warnings against crypto transactions by financial institutions and the general public.
The Finance Bill mandates that individuals involved in transactions of digital assets such as NFTs and cryptocurrencies pay taxes. The Bill defines digital assets as anything of value that is intangible and generated through cryptographic or other means. It includes non-fungible tokens or similar tokens. The tax rate proposed for digital asset transactions is three percent of the exchange or transfer value.
Influencers in Kenya are also targeted by the proposed Bill, which seeks to tax digital content monetization. This refers to the electronic offering of entertainment, social, educational, artistic, or any other material for payment. The proposed tax rate for payments made for sales promotion, marketing, and advertising services whose aggregate value is 24,000 shillings or more in a month is five percent of the gross amount. In addition, payments related to digital content monetization will attract a 15% tax.
Kenya is the leading African country in cryptocurrency adoption and ranks fifth globally, ahead of developed countries such as the United States, China, Russia, and South Africa, according to a 2022 report from Chainalysis, an industry research firm. Only Vietnam, India, Pakistan, and Ukraine rank higher in terms of overall crypto adoption.
Additionally, Kenya is ranked number one when it comes to to peer-to-peer (P2P) cryptocurrency transaction volumes. P2P trading is the act of buying and selling cryptocurrencies directly between users, without a third party or intermediary. P2P trade volume makes up a significant percentage of all cryptocurrency activity, especially in frontier and emerging markets.