Kenyan lawmakers are considering introducing a 3% tax on cryptocurrency and non-fungible 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, Finances Bill2023 would adopt a digital asset tax on “income derived from the transfer or exchange of digital assets,” which would also include specific language for NFTs.
The bill will be the subject of five series of readings, commissions and reports of the National Assembly. If adopted, it will then be forwarded to the President for final approval.
Crypto exchanges or those who initiate the transfer of crypto or NFTs would be required to collect the tax, to deduct 3% of the value of the transfers to be paid to the government. Unregistered stock exchanges in Kenya should register under the tax regime.
Kenya will now tax
-crypto
– monetized online content pic.twitter.com/1mlJ5dXt83— Mpumelelo Ndiweni (@mpumiglobal) May 4, 2023
The bill also seeks to introduce a “digital content monetization” tax, levying a 15% tax on content creators paid to promote and advertise products and services online, including, but not including s limited to, sponsorships, affiliate marketing, merchandise sales and paid subscriptions.
The digital assets section of the bill received a mixed response online.
Some were happy to see that crypto 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 ban was put in place.
Rufas Kamau, a Kenyan research and market analyst, tweeted on May 4 calling the 3% tax a “joke” and sarcastically asked if it applied to “supermarket loyalty points and credit cards “.
The tax rate is 3% on each transaction. What joke!
— Rufas Kamau ⚡ (@RufasKe) May 4, 2023
Kenyan Crypto Advocacy Group, Cryptocurrency Kenya, tweeted that such a digital tax “must apply to (…) everything digital” claiming that a crypto-only tax is “targeted harassment”.
He also pointed out that the tax was higher compared to the fees charged by exchanges, comparing the government’s proposed 3% tax to Binance’s 0.10% trading fee.
“For TRANSFER or EXCHANGE value”
Binance charges a 0.10% fee for trading on the platform as well as a 0.50% fee for instant buying/selling
The government is seeking 3%…
GOOD…#CryptocurencyKE #SpaceYaCrypto #Bitcoins https://t.co/COr6cfxZy3
— CRYPTOCURRENCY KENYA (@CryptoHubKE) May 4, 2023
Related: Web3 Economy to Gain Traction in Africa with DeFi-Based Financial Inclusion
Kenya first moved to regulate crypto in November, introducing amendments to its capital market laws that required those who owned or traded crypto to report information about their activities to authorities.
Kenya ranks among the top 20 countries in crypto adoption. A September report by blockchain analytics firm Chainalysis ranked the country 19th in terms of crypto adoption.
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