Kenya is considering the possibility of implementing a 3% tax on cryptocurrency and non-fungible token (NFT) transfers. The Finance Bill 2023 was introduced to the Kenyan parliament on May 4 and contains specific language dealing with NFTs.
If the bill passes, the exchanges initiating crypto transfers and transactions would be required to collect the tax, which would amount to 3% of the transfer value, initiating payments to the government. Crypto exchanges outside Kenya would also have to be registered under the tax regime.
The bill also seeks to introduce a 15% tax on anything classified as digital content monetization, including sponsorships and affiliate marketing, merchandise sales and other paid subscriptions. That means content creators who promote and advertise merchandise and services online will have to pay up.
With regards to the digital assets section of the bill, opinions were split. Some saw it as good news and recognition of crypto and NFTs in the country. On the other hand, Rufas Kamau, a Kenyan research and markets analyst, sarcastically called the 3% tax “a joke” and asked if it will also apply to supermarket and credit card loyalty points.
Cryptocurrency Kenya, a Kenyan crypto advocacy group, tweeted that the digital tax must be applicable to everything digital and not just crypto adoption, pointing out that it seems like targeted harassment.
Previously, the Central Bank of Kenya had warned against the use of cryptocurrency but had not alluded to imposing outright prohibition. In November, the country introduced amendments to its capital market laws requiring those who own or deal in crypto to report information on their activities to the authorities.
In terms of crypto adoption, Kenya is ranked 19th globally, as indicated in a report by blockchain analytics firm Chainalysis. It scraped into the top 20 countries globally by this metric.
By introducing this bill, Kenya joins a handful of African countries that have introduced frameworks to regulate the cryptocurrency industry and boost its capital market sector. Though the bill is met with mixed opinion, the implementation of a cryptocurrency tax could be a new approach to tax administration and help earn foreign exchange for the country.
According to https://cointelegraph.com/news/kenya-considers-tax-on-crypto-nft-transfers-and-online-influencers
The material in this article is written on the basis of another article.