- Mixed reactions in Kenya as the Government introduces a 3% digital tax on the transfer or exchange value of digital assets.
Kenya Digital Tax looks like the way to go for the East African country Under the proposed 2023 Finance Bill, it will be mandatory for digital asset and non-fungible token (NFT) owners in Kenya to pay a 3% digital asset TAC on income gotten from transactions involving digital assets.
This is part of the government’s efforts to expand its tax base and generate more revenue for the public purse.
It is also a subsequent attempt at taxing digital taxes, as the Kenyan lawmakers had initially proposed the Capital Markets (Amendment) Bill 2022 which charged taxes on exchanges, wallets, and traders.
Kenya Digital Tax: What’s a Digital Asset?
According to the bill, a digital asset is anything of value that is not tangible and cryptocurrencies, token code, numbers held in digital form and generated through cryptographic means or otherwise…providing a digital representation of value exchange with or without consideration that can be transferred, stored or exchanged electronically.
This also includes NFTs and other tokens like it.
Digital Assets Ownership In Kenya
According to United Nations (UN), it is estimated that 8% of Kenya’s population own digital assets, which makes it one of the global leaders in digital asset adoption.
Reactions To The Proposed Bill
Some Kenyans believe that the bill is a step in the right direction, as it will help to legalize crypto in the East Africa’s largest economy.
On the other hand, the local advocacy group Cryptocurrency Kenya makes an argument for the tax being exploitative.
It was stated that if the government wants to be fair, the proposed tax should apply to every digital asset in Kenya.
There has also been some speculations surrounding the reduction of the tax from 3% to either 1.5% or 1%.
The speculations stem from the implementation of previously introduced taxes, whereby the government proposed a specific tax amount but eventually reduced the figure due to the reaction of taxpayers.
Many digital asset owners are hoping this would be the case again.
Kenya: Capital Markets Bill 2022 Proposes Taxation on Crypto Transactions, Exchanges, and Wallets
In 2022, a Kenyan Member of Parliament (MP) proposed an introduction of taxation on crypto exchanges, digital wallets, and other similar transactions through the Capital Markets (Amendment) Bill 2022.
The bill was meant to help the Kenya Revenue Authority (KRA) generate revenue from the flourishing crypto market by going after Kenyans that own crypto and other digital currencies.
In the past, digital transactions were being carried out tax-free and there was no form of regulation guiding activities in the digital market.
However, following the introduction of the bill, banks became mandated to remove 20% excise duty on all commission and fees charged on transactions.
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