Kenya considers tax on crypto, NFT transfers and online influencers

May 5, 2023 admin Cryptocurrency News 0

Kenya’s lawmakers are considering the introduction of a 3% tax on cryptocurrency and nonfungible token (NFT) transfers and a 15% tax on monetized online content, according to a newly introduced bill.

Introduced to the Kenyan parliament on May 4, The Finance Bill, 2023 would enact a digital asset tax on “income derived from the transfer or exchange of digital assets” which also included specific language for NFTs.

The bill will undergo five rounds of readings, committees and reports by the National Assembly, if passed, it will then be passed to the president for final assent into law.

Crypto exchanges or those who initiate the transfer of crypto or NFTs would be required to collect the tax, having to deduct 3% of the transfers’ value to be paid to the government. Exchanges not registered in Kenya would have to register under the tax regime.

The bill also seeks to bring about a tax on “digital content monetization,” levying a 15% tax on content creators paid to promote and advertise products and services online including but not limited to sponsorships, affiliate marketing, merchandise sales and paid subscriptions.

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

Some were pleased to see that crypto and NFTs were seemingly now officially recognized in the country. Previously, the Central Bank of Kenya has warned against using crypto but no outright prohibitions were put in place.

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

Kenyan crypto advocacy group, Cryptocurrency Kenya, tweeted that such a digital tax “must apply to […] everything digital” claiming a crypto-only tax is “targeted harassment.”

It also pointed out the tax was higher when compared to the fees charged by exchanges, comparing the government’s proposed 3% tax to Binance’s 0.10% trading fee.

Related: Web3 economy to gain more traction in Africa through DeFi-based financial inclusion

Kenya first made an effort to regulate crypto in November, introducing amendments to its capital market laws that required those who owned or dealt in crypto to report information on their activities to the authorities.

Kenya scrapes into being in the top 20 countries when it comes to crypto adoption. A September report from blockchain analytics firm Chainalysis placed the country 19th in terms of crypto adoption.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips