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Kenya considers tax on crypto, NFT transfers and online influencers

May 5, 2023No Comments


Lawmakers in Kenya are considering introducing a 3% tax on non-fungible cryptocurrency and token (NFT) transfers and a 15% tax on monetized online content, according to a recently introduced bill.

Presented to the Kenyan Parliament on May 4, the finances Bill2023 would enact a digital asset tax on "income derived from the transfer or exchange of digital assets" that also includes specific language for NFTs.

The bill will undergo five rounds of National Assembly readings, committees and reports; if approved, it will be passed to the president for final assent into law.

Cryptocurrency exchanges or those initiating the transfer of cryptocurrencies or NFTs would be required to collect the tax, deducting 3% of the value of the transfers to pay the government. Unregistered exchanges in Kenya would have to register under the tax regime.

The bill also seeks to generate a "digital content monetization" tax, placing a 15% tax on content creators paid to promote and advertise products and services online, including but not limited to sponsorships, affiliate marketing , merchandise sales and paid subscriptions.

The digital assets section of the bill has seen a mixed response online.

some were pleased to see that cryptocurrencies and NFTs were apparently now officially recognized in the country. Previously, the Central Bank of Kenya warned against the use of crypto, but no outright bans were put in place.

Rufas Kamau, a Kenyan market and research analyst, tweeted on May 4 calling the 3% tax "a joke" and sarcastically asking if it applies to "supermarket loyalty points and credit cards."

Kenyan cryptocurrency advocacy group, Cryptocurrency Kenya, tweeted that such a digital tax โ€œshould be applied to [...] everything digitalโ€ claiming that a cryptocurrency-only tax is โ€œtargeted bullying.โ€

He also noted that the tax was higher compared to fees charged by exchanges, comparing the government's proposed 3% tax to Binance's 0.10% trading fee.

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Kenya first made an effort to regulate cryptocurrencies in November, introducing amendments to its capital markets laws that required those who owned or traded cryptocurrencies to report information about their activities to the authorities.

Kenya is in the top 20 countries when it comes to cryptocurrency adoption. TO September report from blockchain analytics firm Chainalysis placed the country 19th in terms of crypto adoption.

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