Kenya considers tax on crypto, NFT transfers and online influencers

Kenya’s lawmakers are considering introducing a 3% tax on cryptocurrency and non-fungible token transfers and a 15% tax on monetized online content, according to a recently introduced bill.

Introduced to the Kenyan Parliament on May 4, The Finance Bill 2023 would enact a digital wealth tax on “income from the transfer or exchange of digital assets”, and also includes specific language for NFTs.

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

Crypto exchanges or those initiating the transfer of crypto or NFTs will be required to collect the tax, and have to deduct 3% of the transfer’s value to be paid to the government. Exchanges that are not registered in Kenya must be registered under the tax regime.

The bill also seeks to create a “digital content monetization” tax, which imposes a 15% tax on content creators paid to promote and advertise products and services online, including but not limited to sponsorship, affiliate marketing, sale of goods and paid subscriptions.

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

Some were satisfied to see that crypto and NFTs were apparently now officially recognized in the country. In the past, Kenya’s central bank has warned against using crypto, but no outright ban was imposed.

Rufas Kamau, a Kenyan research and market analyst, tweeted on May 4 that the 3% tax was “a joke” and sarcastically asked if it applies to “supermarket and credit card loyalty points”.

Kenyan crypto advocacy group, Cryptocurrency Kenya, tweeted to which such a digital fee “must apply […] all that is digital”, and claims that a crypto-tax is “targeted harassment”.

It also pointed out 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 attempted to regulate crypto in November, introducing changes to capital markets laws that require those who own or trade crypto to report information about their activities to the authorities.

Kenya scrapes into the top 20 countries in terms of crypto adoption. A September report by blockchain analytics firm Chainalysis ranked the country 19th in terms of crypto adoption.

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