The Kenyan parliament has introduced a new bill, The Finance Bill 2023, which proposes a taxation system for cryptocurrencies and non-fungible tokens (NFTs). The bill calls for a 3% tax on crypto and NFT transfers, and a 15% tax on monetized online content, including sponsorships, merchandise sales, paid subscriptions, and affiliate marketing. The proposed regulations aim to regulate digital assets by taxing income derived from transferring or exchanging digital assets.
The bill’s digital assets section has elicited mixed reactions online. Some see it as a step forward, as the proposed tax officially recognizes cryptocurrencies and NFTs in the country. However, critics argue that the proposed 3% tax is excessive, and will hurt innovation and investment in the emerging digital asset sector in Kenya. Some Kenyan crypto advocacy groups even call it “targeted harassment,” and contend that the digital tax “must apply to everything digital.”
Before becoming law, the bill must go through the entire Kenyan legislative process; five rounds of readings, committees, and reports by the National Assembly, and if successful, it will be sent to the President for final approval. If passed, crypto exchanges or individuals initiating cryptocurrency or NFT transfers will be responsible for collecting and remitting the 3% tax to the government, including exchanges not registered in Kenya, which will be required to register under the new tax regime.
Kenya first attempted to regulate cryptocurrencies in November 2022 by amending its capital market laws, which mandate individuals owning or dealing in cryptocurrencies report information on their activities to the authorities. The Finance Bill 2023 is the latest attempt by the Kenyan government to regulate the burgeoning digital asset market within the country.
As the Kenyan government moves forward with The Finance Bill 2023, it remains to be seen how these proposed regulations will impact the digital asset market within the country. With mixed reactions and controversy surrounding the proposed taxation system, it is clear that this issue will continue to spark debate and discussion in the coming weeks and months.
Written By Agbo Obinnaya
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