Kenya proposes 3% tax on cryptocurrency transfers
- Kenya’s Treasury Secretary outlined the tax proposals in a document sent to parliament on 4 May, 2023.
- The 3% crypto tax will target cryptocurrencies and NFT transfers on exchanges and by individuals.
- Kenya is one of the countries with the fastest growing adoption of cryptocurrencies in the world.
Kenya is seeking a 3% tax on the transfer of digital assets, budget proposals from the Treasury ministry outline.
The tax proposals were part of the Finance Bill 2023 that Njuguna Ndung’u, Cabinet Secretary for National Treasury and Economic Planning, sent to the National Assembly on Thursday, 4 May 2023.
The Treasury CS is expected to present the budget statement to Parliament on 8 June, and could see the East African nation have the new taxation measures in place for the 2023/2024 budget year, the details of the proposal showed.
Authorities eye tax for crypto and NFTs
Apart from cryptocurrencies, the tax proposals also target non-fungible token (NFT) transfers. These will relate to transactions made by exchanges as well as individuals.
Digital assets are classified as property in Kenya, and any gains from the sale, exchange, or disposal of such assets would be subject to capital gains tax. Other than crypto, Kenya also targets monetized online content, with the sector set to be subject to a 15% tax.
Around 8.5% of Kenya’s adult population own or hold cryptocurrencies. While countries in Africa such as Nigeria and South Africa have more people owning crypto, Kenya places higher in terms of percentage of the population.
Recent statistics on global crypto ownership and usage by the UN ranked Kenya fifth worldwide and fourth among emerging economies – behind Ukraine, Russia and Venezuela.
According to the latest ownership figures from Singapore-based crypto research company Triple A, over 2.7 million Kenyans own digital assets. Globally, cryptocurrency ownership has risen to an average of 4.2%, with numbers jumping from 320 million in early 2022 to over 420 million in May 2023.
Kenya’s plans for crypto taxation rules come as the trend around the world sees increased regulatory scrutiny of cryptocurrencies. The UK, EU and other jurisdictions are looking to offer clear regulatory guidelines for the industry, particularly around overall protection of investors amid likely risks from unregulated crypto exchanges.