Kenya mulls 3% tax on crypto and NFTs to boost revenue

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(Kitco News) – As Kenya explores ways to shore up its finances and increase government revenue, lawmakers in the country are seeking to tax cryptocurrency and non-fungible token (NFT) transactions as a potential source of revenues according to a bill recently introduced in the Kenyan parliament.

Received by the National Assembly on May 4, the 2023 finance bill aims to modify the income tax law by inserting an article establishing “a tax known as tax on digital assets” which “will be payable by a person on income derived from the transfer or exchange of digital assets.

Based on the text of the bill, the platform owner or person facilitating any exchange or transfer of a digital asset will be responsible for collecting the appropriate tax and submitting it to the Commissioner.

“A person who is required to deduct digital asset tax shall, within twenty-four hours of the deduction, deliver the amount so deducted to the Commissioner together with a return of the payment amount, the amount of tax deducted, and the like such information as the Commissioner may require,” the bill states. “The tax rate relating to digital asset tax is three percent of the transfer or exchange value of the digital asset .”

Non-residents who own a platform where Kenyans trade digital assets will be required to “register under the simplified tax regime”.

A digital asset is defined as any item of value that is not tangible, including “cryptocurrencies, token code, number held in digital form and generated by cryptographic means or otherwise, under any name that is, providing a digital representation of the value exchanged with or without consideration that can be transferred, stored or traded electronically.

The definition also included non-fungible tokens (NFTs), “or any other token of a similar nature.”

Income from the transfer or exchange of a digital asset will be determined by “the gross consideration at fair market value received or receivable at the point of exchange or transfer of a digital asset”.

Highlighting the changing landscape of the global job market, the bill also seeks to impose a tax on the “monetization of digital content”, by applying a 15% tax on content creators who are paid to promote various online products and services. This includes activities such as referrals, affiliate marketing, paid memberships, licensed content, crowdfunding, and merchandise sales.

The bill must undergo five rounds of readings, commissions and reports of the National Assembly before being submitted to the final vote. If passed, it will then go to the President to be signed into law.

According to a September report by Chainalysis that looked at global crypto adoption, Kenya ranks 19th globally in the index’s overall rankings, indicating that the country has one of the strongest blockchain communities. more active. A report presented at the United Nations Conference on Trade and Development in August indicates that 8.5% of Kenya’s population owns crypto, making it the fifth largest country in the world behind Ukraine, Russia, Kenya. Venezuela and Singapore.

Last November, Kenya’s government made its first effort to regulate the country’s growing cryptocurrency industry by introducing amendments to its capital market laws requiring those who own or trade in crypto to report to authorities. information about their activities.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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