The Kenyan government has proposed amendments to the 2023 budget law that would allow for an additional tax on income from digital asset transfers.
The bill was presented to Kenya’s parliament on May 4 and would tax income generated from transactions involving digital assets, including NFT
The tax reform would require participants in the national crypto market who initiate crypto or NFT transfers, regardless of ownership, to pay a 3% tax and submit reports to the tax authorities.
Non-Kenyan crypto-exchanges and cryptocurrencies will have to register under the new regime as soon as possible to comply with fiscal requirements.
Proposal for a tax on digital assets drew mixed reactions from the Kenyan public.
Part of the cryptocurrency community criticized the government for proposing a rate that is disproportionately high compared to existing fees on cryptocurrency exchanges.
For example, the trading commission on Binance is now 0.10%.
The proposed transaction tax on cryptocurrency and non-exchangeable tokens (NFT) would be the first fiscal encumbrance on the cryptocurrency industry in Kenya.
According to a United Nations report, about 8.5% of Kenya’s population, or nearly 4.25 million people, own cryptocurrencies.
The deep penetration of crypto-assets puts Kenya in fifth place in the world for cryptocurrency adoption.
In April, Kenyan lawmakers introduced a bill that would regulate cryptocurrencies as securities and require crypto issuers to comply with a number of requirements.
In addition to registration, companies must keep records of all transactions in crypto-assets and pay taxes on any profits.