The Kenyan national budget, which will be presented on June 8, proposes a 3% tax on the transfer of digital crypto assets
Kenya’s Finance Ministry, the National Treasury, is to introduce the national budget for the coming budget year in June. As reported by Bloomberg, the proposals presented to lawmakers include a 3% tax on income from crypto transactions and non-fungible token (NFT) sales.
The country is currently on the way to clearer crypto regulations and legitimising the industry. Kenyan lawmakers first proposed a bill that would allow for the taxation of crypto exchanges, digital wallets and transactions in 2022, under the presidency of William Ruto who was perceived as more crypto-positive than the other candidate Raila Odinga.
The efforts of regulating crypto are critical for the country where roughly 8.5% of the population own cryptocurrencies. That ranks the Kenyan nation fifth in global adoption of crypto, according to a UN report.
However, the newest proposal has faced a lot of criticism regarding too high a tax percentage and inequality of fiscal treatment towards crypto vs other digital assets.
Besides taxation on crypto and NFT, the budget proposes a 15% tax on monetized online content. That would apply to content creators paid to promote and advertise products and services online including but not limited to sponsorships, affiliate marketing, merchandise sales and paid subscriptions.
For the purposes of taxation, crypto exchanges not registered in Kenya would have to register under the tax regime.
The proposal has not yet achieved legally obliging status. The bill will first undergo five rounds of readings, committees and reports by the National Assembly. If passed, it will be transferred to the president’s approval for final assent into law.
Kenya is not the only African country which aims to include crypto in the official monetary and taxation systems. It was previously reported that the Bank of Zambia works on crypto regulation as well. In emerging economies, cryptocurrencies are gaining importance as a means to improve financial inclusion and facilitate remittances, being one of the main sources of income for many households.