KRA nets Sh1.1bn digital tax revenue in 21 months

The Income Tax Act describes digital assets as anything of value that is not tangible, including cryptocurrencies as well as non-fungible tokens, which are unique cryptographic tokens that cannot be copied and can represent ownership of digital collectibles or real-world assets, such as artworks.

The digital tax was introduced on September 1, 2023, through the Finance Act 2023 and set at a rate of 3 percent. However, the Finance Act 2025, which took effect on July 1, 2025, has since repealed the rate and chopped it to 1.5percent.

“A tax to be known as the Digital Asset Tax shall be payable by a person on income derived from the transfer or exchange of digital assets. The owner of a platform or the person who facilitates the exchange or transfer of a digital asset shall deduct the Digital Asset Tax and remit it to the Commissioner”, the now-repealed Section 12F of the Income Tax Act provided.

The tax was introduced in the wake of efforts by the government to net the growing activity in the country around the pool of digital assets.

Kenya has witnessed a solid interest in digital assets, with the number of cryptocurrency users in the country expected to grow to 733,300 in 2025, up from 10,400 eight years ago in 2017, according to projections by German data firm Statista.

Data by KRA further 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.

The Finance Bill 2025 had proposed to halve the Digital Assets Tax rate from 3 percent to 1.5 percent before an amendment was moved on the floor of the House to do away with the tax entirely, citing poor architecture in the tax.

In the place of the Digital Assets Tax, the Finance Act 2025 now provides for a 10 percent Excise Duty rate on the fees imposed on digital assets transactions in the country, effective July 1, 2025.

The second schedule of the Excise Duty Act has since been amended to insert a new paragraph capturing fees charged on virtual assets transactions at a rate of 10 percent in excise duty.

“When you make a transfer of digital assets, the law provides that you pay tax on the transaction amount. It is the equivalent of being taxed for depositing money in a bank. We are changing this to the fees that the service provider will charge when one trades using digital assets”, National Assembly Finance and Planning Chairperson, Kuria Kimani, told the House when moving the amendment to repeal Digital Assets Tax on June 18th.

According to official data, 10 million Kenyans held one form of a Digital Asset as at the close of 2024, with significant growth in trading involving cryptocurrencies.

The amendment repealing the Digital Assets Tax and replacing it with a 10 percent Excise Duty rate on Digital Assets transactions has been followed in quick succession with the Virtual Assets Services Providers Bill of 2025, which is part of the measures being put in place to tighten the leash on money laundering in the country.

Among the requirements to pull Kenya out of the current grey listing by the Financial Action Taskforce is that legislation be put in place overseeing Digital Assets Providers, owing to the rapid growth of uptake and transactions in Cryptocurrency in the local market.

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