A recently introduced bill suggests that Kenya’s lawmakers introduce a 3% tax on cryptocurrency and nonfungible token transfers as well as a 15% tax on online content that is monetized.
A digital asset tax would be implemented on “income derived from the transfer or exchange of digital assets,” according to the Finance Bill 2023, which was presented to the Kenyan parliament on May 4. It also includes specific language for NFTs.
The National Assembly will go through five rounds of readings, committee hearings, and reports on the bill; if it passes, the president will give his or her final approval before it becomes law.
To collect the tax, crypto exchanges or those who start a transfer of cryptocurrency or NFTs would need to take 3% of the transfer’s value out of it to pay the government. Under the tax regime, exchanges that are not registered in Kenya would need to do so.
The bill also proposes to impose a 15% tax on content creators who are compensated to promote and advertise goods and services online, including but not limited to sponsorships, affiliate marketing, product sales, and paid subscriptions.
Online reactions to the bill’s section on digital assets have been conflicting. The apparent official recognition of cryptocurrency and NFTs in the nation surprised some people. The Central Bank of Kenya previously issued cautionary statements about the use of cryptocurrencies, but no outright bans were enacted.
A comparison between the government’s proposed 3% tax and Binance’s 0.10% trading fee was made in order to highlight how much higher the tax was when compared to the fees levied by exchanges.
In November, Kenya made its first attempt to regulate cryptocurrency by amending its capital market laws to require people who own or deal in cryptocurrency to report information about their activities to the authorities.
Kenya barely makes it into the top 20 nations in terms of adoption of cryptocurrencies. The nation was ranked 19th in terms of cryptocurrency adoption in a September report from blockchain analytics company Chainalysis.