A proposed bill in Kenya has sparked mixed reactions online, as it suggests adding taxes to cryptocurrency and NFT transfers
A recently proposed bill in Kenya suggests the introduction of a tax of 3% on cryptocurrency and non-fungible token transfers, as well as a 15% tax on online content that generates revenue.
The Finance Bill 2023 was presented to the Kenyan parliament on May 4th and proposes a tax on “income obtained from digital asset transfer or exchange.” The bill also includes a specific mention of NFTs.
The Finance Bill 2023 will go through five rounds of readings, committees and reports by the National Assembly. If it is approved, it will be presented to the president for the final approval into law.
Crypto exchanges or those who initiate the transfer of cryptocurrency or NFTs would need to collect a 3% tax on the transfers’ value and pay it to the government. Even exchanges not registered in Kenya would have to register under the tax regime.
Kenya will now tax
– crypto
– monetised online content pic.twitter.com/1mlJ5dXt83— Mpumelelo Ndiweni (@mpumiglobal) May 4, 2023
The proposed bill also aims to introduce a tax on digital content monetization, requiring content creators to pay a 15% tax on earnings from online activities such as sponsorships, affiliate marketing, merchandise sales, and paid subscriptions.
Online reactions to the digital assets section of the bill have been mixed.
Some people were happy to know that cryptocurrency and NFTs were recognized in Kenya as the country’s central bank had previously warned against using crypto, but had not prohibited it outright.
On May 4, Kenyan research and markets analyst Rufas Kamau tweeted that the 3% tax on digital assets was a joke and questioned if it would also apply to supermarket and credit card loyalty points.
Exchanges operating in Kenya to deduct & remit to the @KRACare a tax on every digital asset transaction completed on their platform. Does the Bill's definition of digital assets include Bonga Points, Data Bundles, and Airtime? How about supermarket and credit card loyalty points? https://t.co/1lCKqiQl27
— Rufas Kamau ⚡ (@RufasKe) May 4, 2023
A group advocating for crypto in Kenya, Cryptocurrency Kenya, tweeted that any digital tax should apply to everything digital, and a tax on crypto alone would be “targeted harassment.”
The group also noted that the proposed 3% tax was higher than the fees charged by exchanges. It compared the government’s proposed tax to Binance’s trading fee of 0.10%.
"For the TRANSFER or EXCHANGE value"
Binance charges a 0.10% fee for trading on the platform as well as a 0.50% fee for Instant Buy/Sell
The government is looking to get 3% …
Well…#CryptocurencyKE #SpaceYaCrypto #Bitcoin https://t.co/COr6cfxZy3
— CRYPTOCURRENCY KENYA 🇰🇪 (@CryptoHubKE) May 4, 2023
Last November, Kenya attempted to regulate cryptocurrency by making amendments to its capital market laws that require individuals who own or deal with cryptocurrency to report their activities to the authorities.
According to a report by blockchain analytics company Chainalysis in September, Kenya is ranked 19th in the world for crypto adoption.
