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Finance Bill: Digital assets tax on crypto halved to 1.5pc
The digital assets tax was first introduced through the Finance Act of 2023, and was set at three percent of the gross fair market value of cryptocurrency transactions.
The National Treasury has proposed halving the tax levied on digital asset transactions to 1.5 percent from the current three percent, a change that could reduce the cost of transferring assets such as cryptocurrencies and non-fungible tokens (NFTs) for users.
The move to lower the taxes could also serve to quicken the adoption of digital assets in the country, growing the number of Kenya’s cryptocurrency users from the current estimate of 733,300.
“In paragraph 13 (In the Third Schedule to the Income Tax Act is amended in Head B), by deleting the words three percent and substituting with the words one point five percent,” reads the draft Finance Bill, 2025.
The Income Tax Act describes digital assets as anything of value that is not tangible, cryptocurrencies, token codes or a number held in digital form and generated through cryptographic means and provides a digital representation of value exchanged.
A cryptocurrency is a digital form of money that is not issued or controlled by any monetary authority and is traded online via digital exchanges and marketplaces.
Digital assets also cover NFTs, which include assets like artworks, digital content or videos that have been tokenised through a blockchain. These created tokens are then stored on a digital ledger, while the assets themselves are stored elsewhere.
Income derived from the transfer or exchange of digital assets represents the gross fair market value consideration received or receivable at the time of the exchange or transfer of a digital asset.
The digital assets tax was first introduced through the Finance Act of 2023, and was set at three percent of the gross fair market value of cryptocurrency transactions.
Kenya has seen a steady uptake of digital assets, with the number of cryptocurrency users being projected by Statista to reach 733,300 by 2025 from a low of10,400 eight years ago in 2017.
The Kenya Revenue Authority (KRA) estimates that between 2021 and 2022, Kenya’s cryptocurrency market transacted about Sh2.4 trillion, representing close to 20 percent of the country’s economic output.
According to Chainalysis, Kenyan investors buy cryptocurrencies to preserve their savings and carry out international transactions for individual remittances or commercial use such as purchasing goods to import and sell.
The National Treasury recently moved to compel virtual currency exchanges and wallet providers to disclose the owners of cryptocurrencies in a move to rein in tax cheats, criminals and hackers.
The Virtual Assets Service Providers Bill of 2025 requires that exchanges and wallet providers lift the veil of anonymity and reveal the faces behind the digital assets under their watch.
The ability to hold cryptocurrencies without revealing the identity of the owners has made them increasingly attractive to criminals, including hackers who demand ransom after infiltrating companies.
The International Monetary Fund (IMF) in a recent disclosure said that a large number of Kenyan firms are already using cryptocurrencies for payments to foreign suppliers whenever there are dollar shortages or a weakening of the shilling.
