Kenya proposes taxing cryptocurrency transfers

A recently submitted measure suggests that Kenya’s parliament put a 3% tax on cryptocurrencies and nonfungible token transfers as well as a 15% tax on internet material that is commercialized.

The Finance Bill 2023, which was presented to the Kenyan parliament on May 4, would implement a tax on “income derived from the transfer or exchange of digital assets,” and it also contains specific language for NFTs.

The National Assembly will go through five rounds of readings, committee hearings, and reports on the measure; if it passes, the president will give his or her final approval before it becomes law.

The tax would have to be collected by cryptocurrency exchanges or those who start the transfer of cryptocurrencies or NFTs, with 3% of the transfer’s value going to the government in the process. Exchanges not registered in Kenya would need to do so to comply with the tax laws.

The bill also proposes to implement a tax on “digital content monetization,” which would impose a 15% tax on content producers who get paid to promote and advertise goods and services online, including but not limited to sponsorships, affiliate marketing, product sales, and paid subscriptions.

There has been some disagreement online over the bill’s clause on digital assets.

Some people were happy to find that cryptocurrency and NFTs appeared to have gained formal recognition in the nation. The Central Bank of Kenya previously issued advisories against utilizing cryptocurrency, but no explicit bans were implemented.

A comparison between the government’s planned 3% tax and Binance’s 0.10% trading fee was used to highlight how much higher the tax was when compared to the fees levied by exchanges.

In November, Kenya introduced changes to its capital market legislation that called for anyone who trades in or holds cryptocurrency to register their activities to the authorities. This was the country’s first attempt to regulate cryptocurrency.

In terms of the adoption of cryptocurrencies, Kenya barely makes the top 20 nations. The nation ranked 19th in terms of adoption of cryptocurrencies in a report from the blockchain analytics company Chainalysis published in September.