Kenya has proposed a 3% tax on the transfer of digital assets such as cryptocurrencies and non-fungible tokens (NFTs), according to budget proposals from the Treasury ministry. The tax would target cryptocurrencies and NFT transfers made by exchanges and individuals. The Finance Bill 2023, which outlines these proposals, was sent to the National Assembly by Njuguna Ndung’u, Cabinet Secretary for National Treasury and Economic Planning. Kenya’s new taxation measures could be put in place for the 2023/2024 budget year if the budget statement is approved by parliament.
Digital assets are classified as property in Kenya, and any gains from the sale, exchange, or disposal of such assets would be subject to capital gains tax. In addition to cryptocurrencies and NFTs, Kenya is also targeting monetized online content with a 15% tax.
Kenya is one of the countries with the fastest-growing adoption of cryptocurrencies in the world, with around 8.5% of the adult population owning or holding cryptocurrencies. Recent statistics from global crypto ownership and usage by the United Nations ranked Kenya fifth worldwide and fourth among emerging economies. According to Singapore-based crypto research company Triple A, over 2.7 million Kenyans own digital assets.
The proposed cryptocurrency tax comes at a time when countries around the world are increasing regulatory scrutiny of cryptocurrencies. The UK, EU, and other jurisdictions are working on clear regulatory guidelines for the industry, particularly around the overall protection of investors amid likely risks from unregulated crypto exchanges.
In conclusion, Kenya’s proposed 3% tax on digital asset transfers is part of the country’s efforts to regulate its growing cryptocurrency market and bring in additional revenue. If approved, this tax is expected to impact how exchanges operate in the country and could lead to changes in how individuals and businesses use cryptocurrencies and NFTs.